Real Estate Investing in Duplexes

Duplexes may well be one of the most sought after types of property for first time investors- especially when the investors also are first-time homebuyers. A lot of people see the value of buying a duplex to live in one unit while renting out the other to reduce the overall cost of home ownership. When viewed in this light, duplexes make good sense. It's entirely possible to buy a duplex and within a few years to have the rental income paying most, and sometimes all, of the mortgage cost. It's hard to beat owning your own home and having someone else pay it off for you.

When you look at duplexes as straight investments that will not be owner occupied, they are not as desirable. This is not to say that they are not worthy investments, but the income a duplex produces does not always carry the cost of ownership. If you are working on a long-term goal and can afford to float a duplex in the early years, the building can be a great keeper. You can find duplexes that produce positive cash flow immediately; however, these opportunities are not common. If you can buy a single-family home and convert it into a duplex, the profit picture may become much brighter.

A lot of first time investors like the idea of buying a duplex because of the price. Most duplexes cost more than comparable single-family homes, but less than buildings that contain more dwelling units. Because many first time buyers are not fully aware of how real estate investing works, the lower price makes a convincing statement. In reality, a four unit apartment building, even with the higher price tag, probably is a better value.

Duplexes often are considered an excellent way for investors to get their feet wet as landlords. Because no more than two units are rented out, the owner stands a good chance of being able to manage the property personally. If the landlord lives in one unit and rents out the other, management is even easier. Of course living next to your tenant can be uncomfortable.

You have many good reasons for buying a duplex- and some valid reasons not to purchase a two-unit building. Every real estate deal depends on several factors to become viable. Your personal goals may differ from some other investor's. For this reason, you shouldn't rule out any type of real estate purchase until you and your attorney have examined the deal closely.