Why don’t more investors buy duplexes? Am I missing risks at 3.3k/week passive?

B

bearwasright

New Member
Hey folks, posting anonymously because I’m a bi t of a chicken.

I’m 31 and right now I own three duplexes and two houses—one is my main home, the other’s an investment.

After all the loan costs and stuff, I’m making about $3,300 a week in passive income.

My question is, why aren't more people investing in duplexes and flats?

What risks am I missing here?
 
Duplexes and dual key units? So hot right now. Higher yield.

Flats though. Different beast. Not usually great for investment.
 
Duplex good for passive.
Land good for capital.

Duplex growth hits a ceiling. Better than apartments. Land? Scarce near CBDs. New lots just 300m². Packed tight. In a few years anyone holding 500m² lots. Those? Worth way more.
 
What price did you pay for each townhouse, and what would it sell for today how does that compare to the typical house growth in your suburb over that same time?

While having passive income coming in from an asset is nice, it doesn’t actually add to your wealth if the property isn’t growing much in value. It’s always the capital growth that builds real wealth, not just collecting rent.
 
There's a trade off between lower capital growth and higher rent. Most folks seem to prefer aiming for high capital growth, even if it means a bit less rent, so they can use negative gearing to help with their tax, especially if they’re in that top tax bracket around 45% for incomes over $180k.

Like you (I'm guessing!), my work income is under that threshold, so th negative gearing benefit for us is more like 10% less so for us, really high rental yield is actually better.

I ended up buying in regional Qld for $240k, getting $550 a week in rent. It covers the mortgage and taxes with about $4k left over. I got lucky FNQ had some solid capital growth last year, and realestate.com now values the place at $337k. That’s gonna help me leverage into another investment property soon.
 
Provide specifics on capital spent for acquisitions, loan amounts, and yield. That information will be DIFFERENT for each case so it's tough to generalize. Your situation might be solid, with lower risk; someone else’s might not.
 
Land is better than a living space.
The risk is in capital growth, or sometimes even negative growth.
Sounds like you haven’t dealt with a big shared maintenance bill yet.
 
You know, sometimes and this happens more than you'd think people actually lose money on property.

Take this one place in the suburbs, for example.

The first owner bought it for $525,000 back in 2010.

Then the second owner paid $520,000 in 2017.

The third owner bought it for $463,000 in 2019.

And now it's valued at just $451,000.

That's a drop of 14.1% over 15 years.

So both earlier owners lost their equity, and the third would too if they sold right now.

It really shows that what you buy, and when you buy it, makes a big difference.
 
So, how'd you go with insurance? When I looked into it, it was 2 separate policies, each worth the whole duplex price. Tbh, that kinda put me off compared to buying 2 houses. Nvm, not completely tho imo I'm still playing with the idea of building one next.
 
A poor land to asset ratio basically means that the capital growth just doesn't stack up like what you'd see with a freestanding house on a nice, decent sized piece of land.
 
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