Pro's and Cons of buying duplex and dual investment properties

1. The pros and cons of
buying duplex
investments
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3. • Heads up Subscription services
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Logan Horstead

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strong financial outcomes
Rick Stapleton

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9. Poll: When are you
looking at making
your next purchase?

10. Lets get started

11. Pros of buying off the plan
• You are buying at today’s prices, not market
value for when construction will be complete
• You only need to put down a deposit to
secure “today’s price’’, it doesn’t matter if the
market value has jumped by settlement time
• You have more time to save, so you may not
need to borrow as much
• New properties can mean less maintenance
costs

12. Changes in prices

13. Cons of buying off the plan
• Developments may not go ahead, deal with
reputable business’
• Your financial circumstances can change
• Movement in interest rates
• Finished product can change

14. Introducing Rick from

15. What we will discuss
• What is a dual occupancy (duplex)?
• Town planning
• Finance overview
• Strata overview
• Duplex Strategy
• Pros and Cons
• Market timing – when to buy
• Best areas to buy in
• Duplex Properties Overview

16. Purpose built two dwellings on one property to
be subdivided on completion of construction
What is a dual occupancy duplex?

17. What is a dual occupancy (duplex)?
Attached or Detached

18. Town Planning
• Zoning (Res B, R3
Medium Density)
• Development
Application (DA)
lodged with Council
• DA Code Assessable
• 3-4 month process
depending on Council
What is a dual occupancy (duplex)?

19. • Price point $550,000 +
• Advanced strategy for a client who has already
done a dual living or house and land
• Strong yields and cashflow
• Flexibility of 2 properties in 1
• Potential for building equity faster
Duplex Strategy

20. H&L Dual Living Duplex
Price $450,000 $500,000 $700,000
LVR 95% 90% 80%
Deposit $22,500 $50,000 $140,000
Rent pw $450 $640 $700
Rental Yield 5.2% 6.6% 5.2%
Potential Equity $35,000-$70,000
Approval time 7-9 weeks 7-9 weeks 12 weeks
Area Capital City
Major Regional
Capital City
Major Regional
NSW
Capital City
Major Regional
Duplex Strategy

21. H&L Dual Living Duplex
- Low deposit looking to get
into a deal
- Looking for med to long
term capital gain
- First land and construction
deal
- Low income with minimal
serviceability
- First home buyer to rent
out secondary dwelling to
an investor
- Negative geared property
portfolio
- High income looking for
equity not cashflow
- Turbo charge portfolio with
2 strata titled properties
- High income needing
deductions
- High borrowing capacity
- High deposit required up to
20%
- More experienced property
investor who has done a
land and construction deal
- Looking to recycle deposit
and move onto another deal
on completion
Duplex Strategy – Type of investor

22. Strengths
•High land content compared to units
•High cashflow
•Multiple income streams - less vacancy risk
•Stamp duty on land only (1)
•High LVR lending in category 1 areas
•Median pricing more stable than units in
market downturn
•Create development equity during
construction
Opportunities
• Buy from developer in bulk – discount (5)
• Land developers increase land prices in
subsequent stages (6)
• Purchase in an estate with high owner
occupier ratio
• Purchase infill sites close to city centre (7)
• Having access to wholesale build terms to
maximise equity gain (5)
• Strata title allows individual sale of units
• Refinance equity out upon completion
Weakness
• Longer approval timeframe for DA
• Client needs to pay interest b/w land
settlement and tenant moving in
• Higher price point
• Body corporate fees once strata titled
• Limited duplex lots available in new estates
• Finance from 80% LVR up to 90% LVR
• Specialised valuation and funding
Threats
• Urban sprawl estates – over supply
• Investor estates
• ‘Cowboy’ retail builders resulting in bad client
experience
• Council infrastructure charges reduce
profitability
Duplex SWOT

23. • BuilderBuilder duplex packages include cost of
obtaining strata title
• Building Format Plan (BFP)
• Community Management Statement (CMS)
• Headworks Charges
• The BFP and CMS are lodged with council along
with the final occupancy certificate on
completion of the duplex
• Council releases approved stamped plans and
documents
• Builder lodges documents with titles office
Strata title process - Duplex

24. • Duplex finance is specialised
• Finance broker needs to know what type of valuation
to order and which funder to use
• Valuation can be done in-one-line or strata titled
• Example in Toowoomba for 5 bed duplex (3 bed + 2
bed)
• In-one-line valuation $480,000
• Strata title valuation $600,000
• Most lenders will lend 80-90% on in-one-line
valuation only
Duplex Finance

25. Poll: Would you like a
free borrowing
capacity check?

26. Construct and refinance
• Borrow 80% LVR of package price $550,000 =
$440,000
• Deposit $110,000
• Refinance on completion at 90% LVR assuming
10% uplift in value = 90% x $605,000 =
$544,500
• Release $544,500 less $440,000 = $104,500 of
equity!
Duplex finance example

27. Construct and sell 1 of 2 then refinance
• Borrow 80% LVR of package price $550,000 =
$440,000
• Deposit $110,000
• Sell 1 duplex on completion for $302,500 less
3% selling costs leaves debt of $146,575
• Refinance on completion at 90% LVR assuming
10% uplift in value = 90% x $302,500 =
$272,250
• Release $272,250 less $146,575 = $125,675 of
equity!
Duplex finance example 2

28. Where and when to buy

29. Where and when to buy

30. Where to Buy
• Regional versus capital city areas
• Affordability
• Strata title comparable sales
Where and when to buy

31. • Some of these duplex examples have 5%+
potential uplift in equity based on either an
agent’s market appraisals or registered
mortgage valuation
• Duplexes can be completed in well under 12
months for registered land
Duplex examples

32. Duplex Opportunities – Collingwood Park QLD
• Land: $199,000 (669m2)
• Build: $396,786
• Total: $595,786
• Market Rent: Appraised at
$640pw
• 3 bed ($320pw) per side
• Gross Yield: 5.6%
• Market Value Appraised at
$600,000 to $620,000
Attached 2 x 3 bed, 2 bath
DLUG
Total dwelling size 316.22m2
or approx 158m2 per side
Registered Land

33. Outcomes

34. Outcomes

35. Duplex Opportunities – North Lakes QLD
• Land: $450,000 (641m2)
• Build: $369,703
• Total: $819,703
• Market Rent: Appraised at
$780pw
• 3 bed ($390pw) per side
• Gross Yield: 5.0%
Attached 2 x 3 bed, 2 bath
DLUG
Total dwelling size 315.37m2
or approx 158m2 per side
Registered Land

36. Outcomes

37. Outcomes

38. Duplex Opportunities – Fletcher NSW
• Land: $340,000 (641m2)
• Build: $519,625
• Total: $859,625
• Market Rent: Appraised at
$940pw
• 3 bed ($470pw) per side
• Gross Yield: 5.7 %
• Market Value Appraised at
$880,000 to $900,000
Attached 2 x 3 bed, 2 bath
SLUG
Total dwelling size 307.31m2
or approx 154m2 per side
Land due to register in
1Q2017

39. Outcomes

40. Outcomes

41. Dual Living –Waterford West QLD
• Land: $235,000 (565m2)
• Build: $300,800
• Total: $535,800
• Market Rent: Appraised at
$645pw
• Gross Yield: 6.3%
Attached 4 bed 2 bath SLUG
(144.89m2) / 2 bed 1 bath
SLUG (81.89m2)
Total dwelling size 226.78m2
Registered Land

42. Outcomes

43. Outcomes

44. • Have proven themselves to be reliable, quality
builders
• Standard pre-negotiated build contract terms
• Have proven in-house construction management
system
• Building Contract standard for H&L, dual living
and duplex
• Fixed build periods
• Liquidated damages
• Fixed price
• Turnkey
“Wholesale Builders”

45. Wholesale Advantage
Retail Wholesale
Build Period (House) 26 weeks 16 weeks
Build Period (Duplex) 32 weeks 20 weeks
Liquidated Damages $20 per day = appraised rent
Builder variations Often None
Turnkey Rarely Yes
Build Commencement 6-12 months 3-4 months
Contracts Mgt No Yes
Construction Mgt Sometimes Yes
Handovers.com Sometimes Yes

46. Poll: Would you like
contact to discuss any
of the opportunities?

47. Concierge Service & BuilderBuilder
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clients
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• All about the outcomes
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price!

48. Concierge Service Inclusions
• First access to exclusive and/or off market deals prior to
public release
• You will receive a 24 month subscription to REI’s
Portfolio Builder tools
• You will have a dedicated Concierge Portfolio Manager
(CPM)
• You will receive weekly calls and updates to ensure
progress is being made
• When you reach your equity goal you will be advised so
you can purchase again

49. Concierge Service Costs
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• Amount can be tax deductible
• Outcome based product, not education, not mentoring, but
you will learn along the way!

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