Are Duplexes Making a Comeback?

A duplex gives you more options as a homeowner or real estate investor. Here are the benefits and drawbacks of owning a duplex. A duplex is a multi-unit home with two connected living spaces that have their own entrances but are located within the same structure.

Some people will tell you that the home you live in is an investment. Others will tell you it's nothing more than an expense. The real answer might boil down to a combination of the two – especially if you decide to purchase a duplex.

What Is a Duplex?

A duplex is a multi-unit home with two connected living spaces that have their own entrances but are located within the same structure. Duplexes can take on different forms. You might have a duplex that's split down the middle where each individual unit has its own upstairs and downstairs components. Or you might have a duplex with one complete unit on the top floor and a second complete unit on the bottom floor.

What Are the Benefits of Buying a Duplex?

You might buy a duplex to live in yourself, or as an investment. If you're going the latter route, you can either rent out the entire duplex or occupy one unit and rent out the other.

If you're buying a duplex to live in and not rent out, then the primary benefit is extra space. Let's say you want the option to have your adult children live with you while retaining some independence. A duplex could allow for that, since you'll each have your own complete housing unit but share a roof. Similarly, if you have aging parents, a duplex could make it possible for you to share a home but maintain some distance and privacy.

If you're buying a duplex as an investment, you can benefit from having two units to rent out – and two separate streams of rental income to enjoy. Or you might choose to occupy one unit of your duplex and rent out the other. In that case, you get the benefit of putting a roof over your own head while also generating income.

Of course, being an on-site landlord can be a mixed bag. But the upside is that if maintenance or repair issues arise, you're right there. You don't need to get in your car in the middle of the night if your tenant calls in a panic.

Shaun Martin, CEO of The Home Buying Company, also points out that duplexes can be a reasonably economical way to break into homeownership or real estate investing. "Another advantage of duplexes is that they tend to be more affordable than single-family homes," he explains, "making them a good option for first-time homebuyers."

What Are the Drawbacks of Buying a Duplex?

"One of the biggest disadvantages is that you will be responsible for maintaining both units of the duplex," says Martin. Granted, if you were to buy a single-family home to live in yourself and a separate single-family home to rent out as an investment property, you'd be in the same boat. But it's a point to be aware of nonetheless.

Also, if you're buying a duplex purely as an investment property – meaning you don't want to occupy either unit – then you'll need to work hard to make sure both units have active leases. You might run into financial issues if one unit sits vacant for a period of time.

Furthermore, if you're buying a duplex with the intent to live in one unit but rent out the other, you might run into noise and privacy issues. Any time you share walls, you take on the risk of having a noisy neighbor. But when you're the landlord and your tenant lives under your roof, they may be more inclined to expect an immediate answer any time something goes wrong. And they may have no qualms about banging on your door at midnight if they’re anxious about a clogged drain.

Another thing to consider is that if you're buying a duplex and intend to rent one unit out, you might incur added insurance costs. "Having renters will impact the type of insurance you’ll need," says Courtney Klosterman, consumer trends expert at Hippo Insurance. "If you rent part of the duplex, you will need landlord insurance, which covers damage to the building structure, loss of use, and liability."

Are More Buyers Seeking Out Duplexes These Days?

"Duplexes were once a popular housing option, but fell out of favor in recent years," says Martin. "However, they may be making a comeback due to their many benefits."

Alex Capozzolo, the co-founder of Brotherly Love Real Estate, has a similar take. "Even though buyer interest is slow, surveys have witnessed a 17% increment in demand," he says. "California and Utah have shown a progression in duplex sales in the last two years. Trends show that this demand is going to increase as inventory increases."

Is a Duplex a Good Investment for You?

If you're looking for a way to generate income out of your home, then a duplex is worth considering provided you don't mind the privacy issues that might ensue. And if you're working with a limited homebuying budget, you may find that a duplex is a good fit financially.

A duplex may also be a smart choice depending on your stage of life, such as if you're close to or in retirement. As Martin says, "Duplexes can also be a good choice for those who want to downsize but don't want to give up the space and privacy of their own home."

As is the case with any major purchase or investment, you'll need to weigh the pros and cons carefully before deciding to purchase a duplex. Selling a duplex may be more complicated than selling your typical single-family home, since you might be dealing with multiple leases coming due at different times. You'll need to make sure you have the appetite for that risk before moving forward.

Source: Realestate.usnews.com

Are Duplexes Making a Comeback?

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