So you are considering building a duplex and you don’t know where to start!  Or should you even consider building a duplex?  Everyone on your street might be doing the same and you thought, well why shouldn’t you?  Or perhaps you want your kids to have a good start in life so you decide to build a duplex with / for them.

Whatever your reasons are, building a duplex is slightly more complicated than building a single dwelling home – not that building a single home is not complicated enough, right???

So let’s look at a few questions that will help you gain a deeper understanding of duplexes:

  1. What’s a duplex?
  2. What are the pros & cons?
  3. Who is the best builder to build duplexes?
  4. CDC vs. DA?
  5. What are the associated costs?
  6. How much does it cost to build a duplex?
  7. Where do I start?

Definition

What is a Duplex?  A duplex has two dwellings with a common party wall between them.  This party dividing wall can sometimes be along the entire two dwellings or just part of the buildings.  Duplexes are classified as dual occupancies, that is having two dwellings in one block of land (a house and granny flat is also a dual occupancy dwelling).

Each duplex has two units, let’s call them Unit A (UA) and Unit B (UB).  Some councils allow you to subdivide each unit as a torrents title unit (separate titles) – meaning you can sell each unit separately.

Other councils do not allow you to subdivide meaning that you cannot have separate titles and you have to sell both units together, i.e. both units are under the one title.  You can also have strata subdivision subject to your local council / DCP / LEP.

Pros & Cons

Pros

  • you get two “homes” out of the one block of land
  • you get 2 x rental returns instead of one
  • having the opportunity to retire in one unit and having the kids live in the second unit
  • live in one and rent the second unit
  • sell one and live or rent the other
  • you may achieve higher equity vs. building a single dwelling home (although you always need your feasibility study)
  • sell both and make a handsome profit

Cons

  • rental yield may not be so great compared to building a house & granny flat
  • there are so many hidden costs associated (more on this later)
  • there are also unknown costs that may be imposed by your local council that even your builder cannot anticipate
  • it’s a far more lengthy process (well as per today’s legislation – hopefully this will change)
  • it can be very costly as most builders are not well equipped to deal with this sort of builds
  • builders will charge you more if your tender expires – specially when it can take months for your approvals to come through
  • holding costs (interest, council rates, land tax and loss of rent) can be a lot more than building a single dwelling home or even a house & granny flat

Best Builder

Who is the best builder to build duplexes?  This is a hard question to answer but to put it simply:  a builder who is geared to build duplexes.  Remember, duplexes are more complex so they need more resources that understand LEP & SEPP, constantly chase and liaise with councils & approving authorities, etc…

A lot of volume builders that do single dwelling homes will find building duplexes far more time consuming, so they will want to charge more for it.  Now I am ok for builders to charge the right price, but it’s not right to charge customers for inefficiencies of their processes.

I find that only a select few volume builders can build duplexes more effectively and efficiently.  Small & Custom builders generally tender to build them as well, but they can cost you a lot more.

Custom Project Builders are probably best suited for this.  It all goes back to what a lot of my blogs are about:  choosing the right builder is the key!

CDC vs. DA

Historically, it’s been the process to go through the Local Environmental Plan & Development Control Plans; i.e. DA.  However the NSW state government has developed their rules for duplexes in an attempt to expedite the process.  To date, this has not been successful as the rules were somewhat complicated and we still have to go back to council for certain things.

So now, instead of dealing with one approving authority, you have to deal with two governmental approving authorities.  No, thank you!

Until the NSW state government get their legislation right, I would suggest you go through your local council and the DA process.  I cannot wait to have this removed from councils, but until then, it’s the logical way.

Having said that, if utilizing the SEPP is the only you can get a duplex on your site; then you don’t really have a choice…

If you would like to read more about the CDC vs. DA process, please check this blog.

Associated Costs

While I won’t be able to list EVERY single cost, below are some of the costs that you want to be aware of:

  • build cost
  • total cost of ownership
  • demolition cost (if it’s a knock-down-rebuild)
  • hidden underground cost – I remember this story from a builder that I used to work for and they said that when they started excavating, they found cars buried underneath.  Other sites can have asbestos buried and can be very costly to remove.
  • S94, S94a, S73, services infrastructure upgrades, bonds and other fees that has nothing to do with building the duplex
  • unanticipated costs – your local council  may impose certain conditions on your site like having privacy screens, facade articulation, certain use of material (which can be more expensive), traffic management, pedestrian management, etc…
  • on-site detention stormwater systems – more and more councils are now requiring these in NSW
  • electricity to be brought under-ground rather than overhead to your units
  • hydraulic design costs which most builders will not include upfront
  • SOEE – statement of environmental effect which again, a lot of builders will not include upfront
  • separate metering – again, a lot of builders do not do this as a matter of course upfront and then hit you for more money later should you choose to have separate metering
  • town planning & consultant costs
  • holding costs including interest, council rates, land tax and loss of rent

How Much?

So how much does it actually cost to build a duplex?  This will depend on a number of factors, including but not limited to:

  • Floor Plan Size
  • The complexity of your floor plan
  • Level of Inclusions
  • Is it a Turnkey Solution or not?
  • Site Costs
  • Authority Costs
  • Associated Costs (mentioned above)
  • Quality of the Build
  • Quality of the Builder – you pay peanuts and you get monkeys!!!
  • etc…

Generally, from an investment perspective (subject to location of course), you would be looking between $700,000 to $1,000,000.  If this is for your family living, then it will depend on how much you want to spend of course.

Where to Start?

Here is a general set of steps that I suggest you take:

Step 1

  • Can you actually build a duplex on your site?
  • You can do this by visiting your local council or checking your LEP / DCP / SEPP

Step 2

  • What can you build?
  • Duplex size, setbacks, FSR (floor space ratio), site coverage, etc…

Step 3

  • Who is going to build it for you?
  • Choosing the right builder is the key!

Step 4

  • How much is it going to cost?
  • What are all the associated costs?
  • What are the site and authority costs?

Step 5

  • What are the hidden costs?

Step 6

  • What are the potentially unknown / unanticipated costs?

Step 7

  • What else?

A Note

Building a duplex can take up to two years from the moment you start the process.  So it can be very costly which a lot of people do not take into account (like holding costs).

I would suggest as a general rule of thumb that you would budget $100k to whatever final fixed price you think you have for building a duplex.  This could well mean that a lot of deals are not viable, but I would rather be safe than lose money for the sake of building a duplex.

Also be aware of not over-capitalizing on your duplexResearch your local market and determine how much each unit sells for and work your way backwards to determine the viability of the project.

Of course if you are building them for the family to live in, this may not be as important.

Most importantly, always do your due diligenceChoosing the right builder will help you get a more accurate figure and keep things tight and smooth sailing for your duplex building journey.  The above information is meant as a starting point to get you thinking & researching…

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