5 Reasons I Love Duplexes

There are many ways to invest in real estate. My first 2 purchases were duplexes which can provide a great entry point for new real estate investors or significant cash flow or appreciation for the investor looking to add to their portfolio. Here are the Top 5 Reasons I like Duplexes! 

1. Pretty Much all Financing Is available to you! - If you live in one side you can put as little as 3% down and benefit from the low interest secondary market products. If you do not want to live in it residential products may still be available to you with the right down payment! Also, pretty much all in-house commercial style loans will be available as well. This beats larger properties which will require commercial loans possibly with less favorable terms

2. Provides a Great Entry into Being a real estate investor - Live in one side and rent out the other! This has been termed "househacking" and is a great way to see if real estate investing is for you. You can dip your toes in the water by only having 1 tenant and self-managing is about as easy as you will get. Having a tenant paying your mortgage or reducing it signficantly is also one of the highest ROIs. 

3. Achieve an "economies of scale" effect with maintenance and capital expenditures - Although bigger multi-units will provide even more economies of scale a duplex does have a signficant amount of shared expenses that will help keep your costs lower than if they were seperate houses. Things like replacing roofs, siding, mowing, snow removal, landscaping, concrete work all can be done at once on each property saving you time and money on those expenditures. 

4. More inventory then other multi-units - There are more duplexes built then any other multi-unit which is great when it comes to finding one to buy but also provides other benefits. Since more are sold then larger multi-units there are more comps. This can be great if you ever want to cash-out refi or when it comes time to sell. Additionally it will be easier to nail down rents and will be easier to sell.

5. 100% vacany is rare - Unlike houses which go from 0% money coming in while vacant to 100% coming in when filled a duplex can spread out the exposure to vacancy. Structure your leases so they do not come up in the same month and the duplex will always be producing money.