The duplex is the most basic entry-level form of a multi-family property.
It is a property with units attached to each other. Each having its own unique set of keys.
Some duplexes are side-by-side to each other, some are separated by the ground floor and upper floor, some are income suites in the basement or attic, etc.
And most share some common space.
If a house has 2 separate living units, it’s by definition a duplex.
However, do note that different countries might have different definitions of what is a duplex.
When investing in rental property, moving up to the multi-family property is the next step from single-family houses.
If buying a 6-unit property is too much to swallow, then consider a duplex as a starter as they have various benefits and advantages for the landlord.
1) House appeal
When people decide to move on from apartment living, a detached house is often what comes to mind.
But a lot of times, buying or renting a whole house could of outside the budget of a tenant.
A duplex allows tenants to live in a house environment without needing to pay for a rental for a whole house. This is because the rental would be lower from the smaller square footage.
If a duplex house is equally split into 2 units, by theory a unit would probably cost half the market rental of the entire house.
Residents (tenants) will be able to enjoy shared use of the garden, yard, driveway, playground, etc.
2) Affordable living in good neighbourhood
Most, if not all, residents would prefer to live in good neighbourhoods.
The problem is that these areas usually have high occupancy rates and have highly-priced rentals when a house becomes available.
A duplex or triplex allows tenants to move into desirable neighbourhoods without needing to break the bank.
It is a cost-effective way to rent a house at the price of an apartment.
As mentioned previously, the common shared space can be a huge draw factor in attracting high-quality tenants.
3) Same maintenance costs
For single-family homes, maintenance costs like those for the yard and garbage disposal are incurred so as to serve a dwelling and family.
For a duplex, you will be effectively serving 2 dwellings and 2 families at the same costs!
This is on top of the premium price you should already be charging on a per square foot basis.
4) Diversify risks associated with vacancies
Vacancies are nightmare scenarios for any landlord because the mortgage payments still have to meet in a timely manner whether you have tenants or not.
With 2 or 3 tenants to collect rent from, you can at least have some assurance that part of the mortgage is being covered by the remaining tenants should you experience vacancies.
This is a great hedge against vacancy risks.
5) Have someone else pay for your residence
There’s nothing stopping you from staying in one unit as your residence and renting out the other to tenants.
You get to own the house and enjoy your privacy while the tenant “next door” will be servicing your mortgage commitments for you.
If you managed to snag a duplex at a low price and acquire a tenant willing to pay premium rental, you are basically living rent-free while your home equity magically accumulates like magic!
Where else in the world can you find such a bargain?
6) Higher rental per square foot
It is one of the unwritten laws of real estate.
In areas with high demand, the smaller the home, the higher the price per square foot.
Just refer to studio apartments in the city as a reference.
If there is considerable demand in the area, you are well within your rights to price your units higher per square foot compared to other rental properties in the area.
The key here is affordability.
As long as the final price is much lower than the final price of houses in the area, your duplex unit is going to look all the more attractive compared to the others.
7) Unique selling point
When the time comes for you to sell the place, a duplex puts the property in a unique niche that can look like a very striking proposition to the potential buyer.
Especially for someone on a budget, the prospect of rental income can turn the purchase affordable even though it was unaffordable in the first place.
Tenants can help the new homeowner meet mortgage payments until the owner has a personal income high enough to take on the mortgage himself.
No need for seller financing. It’s more like tenant financing.
The fact is that from an investment standpoint, duplexes can be better cash cows compared to single-family detached houses depending on the local nature of demand.
Finally, do make a check with local laws and codes if you are converting a single household house into a duplex.
There might be restrictions to meet and criteria to fulfil in order to proceed.
Dual Keys might be a great, cash-flow positive, addition to your portfolio, to help you grow your income and keep your portfolio in balance. If you need more information, call us today!
source: propertylogy
