Sydney’s median house price has grown an impressive 97% over the past 10 years – a 15% year-over-year growth also skyrocketed the sentiment to invest.
Meanwhile, duplex (or town houses) emerge as a practical and lucrative option for investors. Building a duplex offers a multitude of benefits, from maximising land use and generating rental income to potential capital gains.
In this comprehensive guide, we will delve into the step-by-step process of duplex construction, providing valuable insights for Sydney property owners looking to make a sound investment.
What is a Duplex?
A duplex is a type of housing structure that consists of two separate dwelling units within a single building. These units share a common wall but have their own entrances, kitchens, bathrooms, and living spaces. Duplexes can be built in various styles and configurations, and they are a popular option for both homeowners that prefer having families around and investors looking for rental income.
The Benefits of Building a Duplex
One of the biggest advantages of building a duplex is the potential for increased income. Separate units within the duplex are perfect for renting out, providing the property owner with a consistent and reliable source of rental income.
Likewise, the construction costs for a duplex are generally lower than building two separate single-family homes. This is due to the shared wall and foundation between the two units, resulting in cost savings on materials and labor.
Finally, in NSW, duplex homeowners can benefit from potential tax advantages. These may include deductions for rental property expenses and losses, depreciation benefits, and potentially lower capital gains tax rates when selling the property compared to a primary residence.
Plan Your Budget
Before embarking on a duplex construction project, it’s crucial to establish a realistic budget. Consider the following factors and allocate funds accordingly:
- Land costs (40-50%): The cost of the land will depend on the location, size, and zoning requirements. In Sydney, the average cost of land suitable for a duplex can range from AUD 600,000 to AUD 2,500,000.
- Construction costs (30-50%): Construction costs are tied to the size, design, and materials used. Allocate a good amount of construction budget, ranging from AUD 800,000 to AUD 1,500,000, for better market competitiveness.
- Permits and fees (5%): Factor in the costs of obtaining building permits and other necessary approvals. Depending on your specific circumstances, these costs can range from AUD 5,000 to AUD 50,000.
- Financing costs (5-10%): If you’re financing the construction, contact your bank about the interest rates and loan terms. Financing costs will depend on the loan amount, interest rate, and loan term.
- Contingency fund (10%): Set aside a contingency fund to cover unexpected costs. This should be around 10% of the total budget.
Find Your Ideal Location
The location of your duplex will significantly impact its value and rental potential. You should focus on neighborhoods that are safe and desirable with good access to amenities, as this will make the property more attractive to potential tenants.
The proximity of your duplex to schools, transportation, tourist attractions, and shopping will also be a key consideration for many renters. Consider who would be your ideal renter. Would you want them to stay for short term (less than 1 month), medium term (between 1 to 10 months), or long term (over 1 year)?
Researching the rental market in your preferred area will allow you to ensure there is sufficient demand for duplex units and that your investment will be successful. This is also to make sure the zoning regulations in your desired location permit for building a duplex.
Do a Feasibility Study
A feasibility study will help you assess the viability of your duplex project. Work with a town planner or a construction consultant to answer crucial questions such as:
- Site conditions: Understanding the soil type, topography, and other site conditions is crucial for ensuring the stability and safety of the duplex structure. It will also inform the design of the foundation and other structural elements.
- Financial feasibility: Analyzing the projected costs and revenues of the project is essential for determining whether your duplex project is financially viable and will generate a return on investment.
- Environmental impact: You may need to clear land for your duplex, this is why assessing the environmental impact of your construction is extremely important. You could be fined over 100,000 AUD for breaching NSW environmental regulations.
Choose Your Design
The design of your duplex should prioritise functionality, aesthetic appeal, and adherence to local building codes. Key factors to consider when selecting a design include the number of bedrooms and bathrooms, as these will directly impact the rental potential and target market. Additionally, the layout and flow should be well-planned to ensure both efficiency and privacy for occupants of different units.
You may also want to incorporate energy-efficient features, as they can greatly reduce long-term operating costs. Furthermore, it is worthwhile to consider adding accessibility features to accommodate potential mobility needs. This can be a great addition to family duplexes.
Examples of Duplex Design
There are 3 main types of duplex construction: side-by-side, stacked, and town house.
Side-by-side duplexes have each unit occupying one side of the building, sharing a common wall. Stacked duplexes position one unit above the other, with separate entrances for each. Town house duplexes are multi-story buildings where each unit occupies a separate floor and shares common areas with the other unit.
You can find duplex buildings in various Sydney suburbs. Look for the Inner West, with suburbs like Ashfield and Leichhardt, which boasts charming period architecture. The Eastern Suburbs also feature modern duplexes with coastal living. The North Shore, with Chatswood and Roseville, provides family-friendly duplexes near schools and parks.
Start Your Duplex Construction
With the complexities of planning a duplex, zoning regulations, and construction processes, it’s essential to have expert guidance throughout your project.
At Construction Concierge, we provide a free consultation service to streamline your project and connect you with our carefully vetted network of professionals, all at no extra cost.
From understanding local council requirements to selecting the right builders, we ensure that every aspect of your project is managed efficiently to meet the industry’s best practice.
With over 30 years of combined industry experience, we have helped countless clients realise their vision while providing support at every stage.
By working with Construction Concierge, you can minimise risks and maximise the potential of your duplex build. Contact us today to start your construction with confidence!
