Building a duplex has the potential to be a real money maker and is an exciting endeavour to embark on, but there are plenty of potential pitfalls to be aware of.
As with any building project, one of the biggest ones is the very real possibility of going over budget.
To avoid any serious blow outs, make sure you do your homework and follow these top tips from Futureflip director Neil Hipwell, who specialises in building duplexes.
1. Do your costings in full
High up on Hipwell’s checklist is to ensure you have accounted for every cost.
“Many people call me to ask for a build cost estimate, not a development feasibility. This means I’ll cover the building costs related to the development not the preliminary and development costs,” he says.
These costs normally add an extra $150,000 on top of a build price, he adds, so it’s always a good idea to seek professional advice regarding a full-scale budget.
2. Mind the block
Another piece of advice the duplex specialist has is to thoroughly conduct your due diligence on the block of land analysis. This means noting all the pros and cons and the costs associated to that particular block, as opposed to another block.
“Some blocks are more expensive to build on due to soil type, access, slopes and easements,” Hipwell says. “You need to make sure the block you’ve chosen doesn’t have too many hidden cost associated with it.”
3. Design is key
Good design is so important when trying to make a profit on any property, and Hipwell stresses that with duplexes, you need to give buyers what they want.
“Aim for an impressive product that will appeal to potential buyers, while also designing in a way that is cost effective for you to build, otherwise you will over capitalise. It’s a juggling act so do your homework,” he says.
4. Follow the market
You also need to follow the market as you’re designing and building. You can do this by going to all the open homes in the area that have similar builds to get a good feel for what people like and don’t like, as well as establishing what your duplex may be worth.
“The last thing you want to do is tell the agent to over price it, as it will then sit around, burning up holding costs and become harder and harder to sell,” he says.
5. Do your sums
“Before you start anything, make sure you seek advice from you accountant or taxation lawyer to make sure your accounting structure is done properly,” says Hipwell.
Without this, he adds, you could be putting yourself at risk or costing yourself unnecessary amounts.
“The average cost my clients outlay on land and build is $2.5-$3m. The accounting structure is extremely important as your dealing with very large numbers.”
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Source: realestate
