I was wondering how building a duplex of triplex works out as an investment stratedgy.
I was thinking of obtaining some cheap land possibly around the outskirts of area that is large enough to attract a consistant flow of tenants and then employing a big building company to build a cheap duplex.
My questions are….
Has anybody done this before and would it work out in todays market ?
Would it cost very much more to build than a normal brick and tile spec home ?.
Are there zoning issues with the council ?
Is it legal to have it on one title and rent it as two seperate leases ?
At what point does it change from a duplex to a block of flats. 3×2 bedroom untis 4x1bedroom units. I’m assuming that the cheap land I find probably won’t be zoned for flats.
Thanks,
Mark
Perhaps have a chat at the local council. I haven’t done it but zonings vary for different types of dwellings and this vary form council to council so best to talk to the one where you intend to do the project.
I’m sure others will have more ideas for you soon, but there’s aplace to start anyway.
Reagrds
PKHi Mark ,
I’m a beginner Investor but for what my oppinion is worth………I wouldn’t buy land and build
#1 you are buying retail price when you build
#2 you will pay GST (less cash flow)
#3 you have to service the loan for quite a while before it’s rented.
#4THE BLOODY HEADACHS
SO……….UNLESS those shares of yours have doubled ..think twice and good luck[wink2]“Has anybody done this before and would it work out in todays market?”
— depends on the location, product and supply/demand [market conditions].
“Would it cost very much more to build than a normal brick and tile spec home?”
— a multi-dwelling i.e. duplex, is generally more cost effective than building two spec homes, for example – economies of scale.
“Are there zoning issues with the council?”
— as pointed out, you need to contact your local council and/or city planning department to assess zoning issues.
“Is it legal to have it on one title and rent it as two seperate leases?”
— generally the answer is yes, but again this needs to be clarified with your local council.
The first red flag that stands out when reading your post is your emphasis on “cheap”. This often extends from limited access to capital and/or experience – although I could be incorrect.
But if finance is an issue, then be very cautious before proceeding, especially if your strategy is to build then sell – which I wouldn’t recommend if access to capital/finance is or could be restricted.
From an experienced developers perspective, focusing on cost-cutting and building “cheap” dwellings, can compound your risk significantly.
If you are going to develop property – any size or shape, then do it right.
Find a site which conforms with quality, spacious dwellings – which is where sales trends are heading. Finance will follow and you will likely find your profit margin increases substantially.
The time and capital you personally commit will not likely change – compared with a “cheap” development – and the risk you incur should be much lower.
The key with development, alongside due diligence and having an exit strategy, is investing as few of your own dollars as possible – which can be achieved no matter how high quality or large/small the project.
Furthermore, quality attacts other people’s money [OPM]. OPM is easier to secure, as is bank finance, when the project is of a high standard and the outcome is more predictable.
— Michael
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