Why Duplexes are a Great Investment
Say the words “real estate investing,” and many aspiring investors will automatically think of condos. While this in-demand property type is the go-to for many first-timers, there are other options. These include duplexes, which are often overlooked but have many potential advantages to offer. They’re a good potential fit whether you’re planning to rent out one unit or reap a higher return by leasing multiple properties.
Here are a few reasons why duplexes can be an incredible real estate investment…
Are you currently a renter who’s dreaming of owning a home? Do you worry about the steep monthly payments associated with a mortgage? A duplex investment strategy may be right for you. Having a tenant means you’ll be bringing in a big chunk of extra income each month. When you put that money towards covering (or taking a big bite out of) your mortgage, you’ll have more funds to start pursuing greater financial freedom.
The tax benefits associated with being a rental-property owner can make the process more affordable. Many would-be investors aren’t aware that they’re in a good position to take advantage of all kinds of deductions. These could include expenses such as property taxes, utilities, homeowner’s insurance, some maintenance costs, and even mortgage interest.
The convenience factor
Managing a rental property can be much easier when you live on-site. Your job as a landlord will include performing repairs and maintenance, and it can make life a lot simpler when that means heading next door. Not only that, but the proximity will allow you to keep an eye on the condition of your unit. Just remember that privacy is an integral part of the landlord-tenant relationship!
You can double your income
Of course, you don’t have to live on-site. If you decide not to, you’ll be taking in double the monthly income—for the price of one piece of property. Since purchasing two condos will usually set you back more than buying a duplex, this is a smart strategy for boosting your ROI.
An accelerated strategy
Ready to make a significant real estate investment—and start seeing major returns? If you have significant equity in a single-family home, tapping it could allow you to take advantage of an accelerated strategy.
Here’s one way it could work. Start by using a home-equity line of credit (HELOC) secured by your primary residence. If you want to scale quickly, borrow enough to cover the down payments and closing costs for three duplexes. You’ll need to put down 20 per cent since you’re making an investment.
The good news? You can likely deduct the money you take out to purchase an investment property from your taxes. Ask your accountant to learn how this might work in your specific circumstances.
The rents you collect for these units will add to your overall income, which could help you qualify to purchase one or more additional properties. Scaling your investment in this way could allow you to retire very comfortably in under two decades. It may sound like a stretch, but it’s entirely possible if you have the equity!
The bottom line
Duplexes are a great option for those who are fairly new to real estate investing. Whether you’re planning to buy one and rent out half, or scale quickly for a higher ROI, this property type could form part of a very successful strategy.
The key to any investment is making informed decisions. Start by talking to a reputable real estate agent, financial advisor, and lender.
Thinking about investing in real estate in the near future? Reach out to learn what’s happening in the market—and what it means for you.