Investing in a Rental Duplex? Here’s What You Must Know

: A charming duplex along W Alexandrine St. in the City of Detroit

Investing in a Rental Duplex? Here’s What You Must Know

Many savvy investors are looking for opportunities to expand their portfolios with rental properties in today’s market. However, not all opportunities are lucrative. Therefore, you have to know how to separate the good from the bad, especially if you plan to invest in a small multi-family property like a duplex.

You need to know a few things to make informed decisions and protect your investment.

Keep on reading to learn how to do just that.

What Qualifies as a Duplex Property?

A duplex is a type of residential property with two individual units under one property tax ID. The units can be arranged side-by-side, on top of one another or even one in back of the other. Either way, they come in two, compared to other multi-family properties like a triplex or quadruplex which has three or four units.

Duplexes can have varying numbers of rooms in varying sizes. The layouts can be similar or completely different, with some  having their own exterior entrances and others sharing a common exterior entrance with separate interior doors. The units may share utilities; although, it’s not unusual to see units with separate electric and/or gas meters.

What to Consider When Investing in a Rental Duplex

Owning a duplex is an excellent way to use the “house hacking” strategy, where you use one of the units as your primary residence and rent out the other for an additional income stream. You’ll effectively offset your mortgage or settle other bills or further your investment portfolio.

However, investing in a duplex isn’t all fun and games. There are disadvantages to consider as well.

Here’s a chart that shows some of the pros and cons of investing in a duplex:

How to Find a Good Rental Duplex Property

So, how do you actually find a good duplex property investment?

Well, your key objective should be to find one that fits your investment goals, fits your budget, and is located in a convenient area. Moreover, you should also decide if you want a duplex that’s ready for move-in, or a fixer-upper that you’ll have to bring up to rental standards first.

Here are the key steps to find a good rental duplex investment opportunity:

  • Educate Yourself: Gain a deeper understanding of how duplexes work. Carry out real estate market analysis, thoroughly assess each potential deal, and plan out your investment strategy.
  • Get Pre-Approved: Line up your finances and demonstrate to a seller that you’re a serious buyer. You should have a good credit score, credit history, debt-to-income ratio, stable income, employment history, and a solid grasp of your assets and liabilities.
  • Find an Agent: Work with an experienced agent or property management company to leverage on their knowledge, network, connections, and follow due processes in the real estate transaction. Working with experts will ensure that you’re investing correctly.
  • Search for a Good Property: Search for duplexes on websites like Zillow, the multiple listing service (MLS), via tools like Mashvisor’s Property Finder, or by reading our Deep Dive guides into the rental hotspots in Metro Detroit. Discuss with your agent to identify the best duplex.
  • Conduct Due Diligence: Ensure that the property meets your expectations. Carry out rental property analysis, conduct a neighborhood analysis, inspect the property, confirm the zoning laws, negotiate on the price, see if you’re eligible for insurance, and finalize your loan documents.
  • Make an Offer: Make an offer to the seller and have your agent take care of the paperwork. Your offer can either be accepted, countered, or declined. You’ll have to work well with your agent to get the best possible deal—even if it means to pay a little more than what you bargained for.
  • Close the Deal: Come to a mutual agreement and close the deal. You can do this at the title company or an attorney’s office (depending on which state you’re in), and have your agent help you navigate the process.

And that’s it, you’ll then own a duplex that you can add into your investment portfolio. You’ll generate higher returns, have a good place to live in yourself, and be well on your way towards financial freedom

Double the Units, Double the Opportunities

Investing in duplexes opens new opportunities for you to leverage on your investments, expand your portfolio, and reap twice as much returns compared to single-family homes. As long as you keep the key considerations in mind, you’ll get the most out of your money and meet the investment goals you’ve set.

Need more help? Get in touch with our team today. Our expert property managers have been in the industry for more than two decades, and have all the insider knowledge and irrefutable experience required for you to become a successful rental investor.

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