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Understanding the Advantages of Owning a Duplex

Choosing the right type of real estate involves weighing its advantages and considering how you plan to use it. It’s easy to think of a single-family home as a place to raise your family and create lasting memories, but have you considered the benefits of owning a duplex?

A duplex offers an array of advantages to both families and investors, providing opportunities beyond what a typical family home does. Let’s explore the pros and cons of owning a duplex and discover if it’s the right property for you.

Why Build a Duplex Property?

Duplexes are popular in densely populated areas due to the space-saving nature of the house without losing space inside. Still, even outside of cities, there are enormous advantages to building a duplex. For example, having a separate unit with its entrance means a rentable space that doesn’t impede your privacy or can give additional space for visitors, aging parents, returning adult children, or even a separate space for work.

While some people may look at duplexes as more real estate investment rather than for families to own, consider the long-term benefits of duplex ownership:

One of the top advantages of investing in a duplex is the rent income potential. Depending on where the duplex is, renting the other unit can cover over half of the monthly mortgage payment and help subsidize your share of the bill. If the idea of housing tenants long-term isn’t appealing, there are plenty of ways to use the spare unit for extra income, such as vacation rentals, to help with mortgage payments and own the home outright sooner.

Airbnb is a popular platform for short-term stays, much like how the public uses hotels. With a single unit, and if local regulations allow, you can invest in an Airbnb for extra income at your convenience without worrying about long-term tenants or having available space for visiting loved ones. When your unit is free to earn extra income, schedule it on Airbnb’s platform, and when you have visitors, block out the dates so no bookings can be scheduled.

Having a large, extended family can be a blessing, especially when you have real estate that gives both privacy and proximity to each other. Duplexes provide one of the ideal setups for multigenerational living: a separate unit that gives independence for adult children returning home or aging parents who benefit from being closer to family.

Advantages in Building a Duplex

Beyond what you’re able to do with both units in a duplex, there are financial opportunities you can take advantage of as either an occupant or as a landlord with a good investment property:

Build Equity Fast: For many, purchasing a dream home in the perfect neighborhood is the ultimate goal, but it’s not always achievable when searching for a house in today's market. Constructing a home in a lower-cost area can be a smart way to build equity faster, bringing you closer to your dream neighborhood. With a duplex, rental income can accelerate that process even further.
Good Tax Benefits: Many tax benefits come with owning real estate, but with a duplex, there are even more you can enjoy. For example, you itemize deductions on your tax return and rent out one of the units. In that case, you can write off different expenses related to the rental unit. Repairs, professional services, interest, and depreciation for rental property can be considered tax deductions.

Quick Tip

The best way to avoid some of the cons of owning a duplex and take full advantage of those perks?
Research and plan your budget well.

Drawbacks in Building a Duplex

Duplexes deliver an array of perks to their owners, but like any property, there can also be drawbacks. No property type is removed from a few downsides, from zoning hurdles to construction challenges.

Landlord Responsibilities: Being a landlord is a job, arguably more than a full-time one, that isn't for everyone. If you live in the duplex, you're adjacent to your tenant, meaning having long-term house guests that you're legally bound to right next door. For example, many landlord-tenant laws are designed to protect renters from unsavory landlords. However, this also makes it challenging to move poor tenants, and it's your responsibility to be familiar with those laws.

Also, the extra income is nice and can offset your mortgage, but what about when you have no tenants? It's an unused space that you're footing the bill on with regular maintenance or repairs, with or without tenants.
Higher Costs than Single-Family Homes: One of the perks of duplex investment is the low-down-payment options you can qualify for, but you'll likely spend more upfront than a single-family home. Also, property insurance rates are higher for duplexes, and the appreciation is lower.

On the landlord side, repairs can eat your income if you rent out one of the units. You can offset the expense by handling it, but hiring contractors and repairmen can quickly become costly unless you're very handy. However, new duplex construction requires fewer repairs than buying an existing duplex to own or rent.

Duplexes: Prepare for Benefits, Mitigate Drawbacks

Let’s recap what we’ve learned about the benefits of owning a real estate duplex and how to ensure the drawbacks are navigated successfully:

Great investment from rental income opportunities
Perfect for multigenerational living
Tax benefits from renting
Qualifying for larger mortgages with lower interest rates
Building equity more quickly

If you know you’ll flip the duplex at some point, it’s essential to know the area you’re building it in or buying, the neighborhood’s potential, and the appeal of a duplex in that area.

If you plan to rent out one or both units, it’s essential to budget for potential vacancy periods to protect your income.

As with any real estate purchase, it’s important to weigh the pros and cons before moving forward. While a duplex offers many benefits, comparing them with potential drawbacks ensures you make a well-informed decision that suits your long-term goals. HiLine Homes Home Consultants are here to guide you through every step of your home-building journey, helping you navigate the process with confidence. Schedule a consultation with us to know more.

Contact your local HiLine Homes office to speak with a knowledgeable Home Consultant about our home building process. If financing is needed, be sure to ask about our approved lenders, whether you need to purchase land or not.