Real Estate Investment Property Spotlight: Duplex Homes
There are many different types of investment properties that appeal to new and experienced investors alike. We’ve already talked about a few of them here on this blog. Today we’re going to talk about the popular duplex style.
With the look and feel of a traditional detached home at a more affordable price, this could be the investment option you’ve been looking for. Learn more to determine if a duplex is right for you.
What Do Modern Duplex Homes Look Like?
From the outside, a modern duplex home looks like a large detached house. It’s only when you look closer that you realize that there are front entryways on both the right and left sides.
That’s right. Today’s duplex homes are typically built in a side-by-side fashion, rather than the up/down models of the past. This means that the resident on each side enjoys a more typical two-storey layout, with an open-concept living area on the main floor and the bedrooms located on the second floor.
Newly built duplexes have all of the features that buyers and renters are looking for, including design features, such as high-quality building materials like quartz countertops and vinyl plank flooring, and layout features, such as a master suite and second-floor laundry. They also usually have an attached garage and a backyard area for the kids.
Single Side or Both Sides?
One of the most interesting prospects with duplex homes is the ability to buy both sides of the duplex. Builders typically sell one side at a time, meaning that the owners of each side of the duplex may not know each other before they move in. However, as an investor, you would likely have the opportunity to purchase both sides.
Doing this would undoubtedly increase the cost of your investment, but it also offers several advantages. When it eventually comes time to make repairs that affect the entire exterior of the home, such as replacing the roof, you won’t have to coordinate with the other homeowner if you own both sides. It also makes sense for investors to have their properties in the same location, as it’s simply easier to manage.
Extra Space=Extra Income
Like many other styles of investment properties, duplex homes often allow you to finish the basement into an additional income suite. If you own one side of the duplex, this gives you two ways to earn income. If you own both sides, you have four opportunities. This can be a great way to dramatically increase your income without significantly increasing your costs.
If you are planning to live in the property you’re purchasing, you may qualify for a lower down payment. Those who purchase both sides of the duplex and include basement suites will have four units, which means that they will need at least a 10 percent down payment to purchase the property. If there are only two units on the property, you could qualify for a 5 percent down payment.
Great Appeal to Renters
Duplex homes are appealing to renters, especially those who have young children. They’ll appreciate all the living space that they get in a duplex. It’s almost impossible to find this much space in an apartment complex. Additionally, a duplex home is likely to have a backyard for the kids to play in, and it’s probably even in a community with a playground nearby. These features mean that families are likely to pay premium rates for the rental, and you’ll be able to earn more.
Should You Buy New or Resale?
It’s not always easy to find duplex homes for sale on the resale market. When you do, they’re typically the older top-bottom style of duplex that’s just not as appealing to renters. It looks and feels too much like an apartment.
Renters really like the modern appeal that you’ll find with new construction. And with the warranties that come with these properties, you’ll feel confident that you won’t have to deal with repair costs soon after your tenants move in.
Possible Cash Flow
Let’s use an example to see what the possible cash flow on a duplex home could look like. A typical purchase price on one half of a duplex home with a separate basement suite is $389,900. We estimate that you’ll be able to rent out the main floor for around $1,400 and the basement suite for $800 a month. The monthly mortgage payment on a home like this would be around $1,755, giving you about $455 in profits each month. If you’re able to purchase both sides of the duplex, you can double your earnings while reducing maintenance costs.
Duplex homes are a great investment for many people, but it’s hard to know if it’s right for you. By talking with one of our Area Managers, you’ll be able to crunch some real numbers to give you a sense of what your investments could look like. Call us to schedule an appointment today.
About the Author:
At Sterling Homes, our mission is to provide the opportunity for affordable homeownership without compromise. Over the last 70 years, Sterling Edmonton has quickly become one of Edmonton’s most popular builders. We bring more than seven decades worth of exceptional customer service, superior design and unparalleled craftsmanship to the greater Edmonton area. As a member of the Qualico Group, Sterling Homes focuses on greater Edmonton’s finest family communities, while being able to offer some of the region’s most family friendly prices thanks to volume purchasing power for materials, trades and land. This has not only made Sterling one of Edmonton’s bestselling, move-up builders, but also one of the industry’s most respected home providers.
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