What is a Duplex, and Should You Invest in One?

What is a Duplex, and Should You Invest in One?

Investing in real estate is a great way to ensure that your money grows significantly over time. You want to acquire properties that will appreciate over the years to maintain capital preservation. A kind of property you may come across when looking to invest in real estate is a duplex. A duplex is an excellent investment because you get two houses for one. They also bring in more monthly rent than single-family homes.

What is a Duplex?

A simple definition is that a duplex is a multifamily home divided into only two units. One person often owns it, but the units can also be sold separately as condominiums. The lot is shared when it has two owners, but the units are to each individual.

Currently, about 18 percent of Americans stay in duplexes or quadruplexes. They are prevalent in smaller cities and on the outskirts of large cities. With a duplex, a family gets some of the benefits of living in a single-family unit like a backyard, but they save on costs.

Typically, duplexes are split down the middle or side by side. You can find duplexes that are split between lower and upper floors. The entrances are separate, but some parts of the structure will be shared. These may be the attic or basement and the yard.

Types of Duplexes

Standard Duplex

A standard duplex is a common kind with side-by-side units separated by a wall. They are often two-story houses. The upper rooms are the bedrooms, and the lower ones are the kitchen and living area.

Ground Duplexes

These duplexes are similar to the standard in that they are two-story. But they have a different structure. The kitchen and living area are on the upper floor, and the bedrooms are on the lower floor, opening to the backyard.

Low-rise Duplexes

A low-rise duplex is different from the standard and ground duplexes because it is taller, including a lofted attic at the top. They often have balconies on the second floor, and the structure's footprint is smaller. It is a much more slender and elegant structure that emphasizes the lot more.

Why Should You Invest in a Duplex?

They Are Great for a Start

Duplexes are a great way to start investing in real estate for several reasons. One is that you can get the same perks as buying a single-family home. For instance, you have access to an FHA loan with repayment as low as 3.5 percent. You can also live in one unit and rent out the other.

Good Monthly Cash Flow

With a duplex, you may pay slightly more than a single-family unit but collect rent from two tenants.

You Will Build Equity

Every time you pay your mortgage, it goes to the ownership of the units. You will grow your equity slightly faster because you get two people paying rent simultaneously.

For more on what a duplex is and if you should invest in one, visit Collins Coastal San Diego at our office in San Diego, California. Call (858) 252-0200 to learn more today.

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