Is a Duplex a Good Investment? Pros and Cons
If youve been thinking about investing in real estate youve probably heard about duplexes and the benefits that go along with them. But before jumping right in its important to do your due diligence and determine whether buying a duplex is the right decision for you.
No investment is perfect and there will always be pros and cons. Thats what well be analyzing in this article. Well go over all the reasons why a duplex is a good investment, as well as a few things to think about before you make a purchase.
Duplexes are a unique type of property that offer some advantages over other forms of real estate. There are plenty of good reasons to invest in a duplex, including:
This is one of the biggest reasons why so many investors like duplexes. Since there are two units instead of just one you can potentially double your rental income. Or you can opt to live in one unit and rent out the other to offset your mortgage payment.
Perfect For Beginners
If youre just starting out in property investment and have a smaller budget, a duplex can be ideal. Because theyre usually located in the suburbs theyre often cheaper than other types of real estate. And while two units are more than one, its still easy to handle and wont be overwhelming for beginners. A duplex can act as the perfect stepping stone to larger properties.
This is another huge plus when it comes to investing in duplex buildings. Because its a rental property any costs associated with maintenance and repairs are seen as a business expense. This means you can deduct a number of the costs associated with owning a duplex from your personal taxes, resulting in substantial savings.
Youll Own Two Homes
A duplex is made up of two single title homes. So, when you buy a duplex youre essentially getting two homes for the price of one. And if youre developing a vacant piece of land its a great way to maximize the value and potential of your property.
While there are a number of benefits associated with duplexes there are a few drawbacks that are worth considering before you invest:
No matter how extensive your screening process is, its possible that youll end up with a bad tenant. This could lead to additional costs if they cause damage to the property and the added hassle of evicting them.
Of course, this is a potential issue youll run into with any rental property. Screen all potential tenants thoroughly, collect a damage deposit, and have them sign a lease to minimize your risk.
Repairs and Maintenance
As a landlord, youll be responsible for all the repairs and maintenance on the property, including the unit you dont live in. This may be a little intimidating if youre not experienced with many household repairs.
Remember, you can always hire outside help to assist you. While this will cut into your profits you can claim it as a business expense on your taxes.