Are Duplexes a Good Investment? Here’s Everything You Need to Know

Duplexes are becoming more popular as a real estate investment opportunity among experienced real estate investors and as a reliable income generator for those looking to enter the real estate market.

But are duplexes a good investment for your portfolio? What are some of the advantages of a duplex house? If you’re considering renting out a duplex you already own, what are some of the advantages of a half-duplex rental? Or, would it be more financially sound to rent out the whole thing?

As Worthington Homes offers duplex builds, you might think we’ll be singing the praises of buying a duplex! And while we certainly think they’re a worthwhile investment, let’s dive into the advantages of buying a duplex and whether the risks outweigh the rewards.

Are Duplexes a Good Investment?

Simply, put, yes! Duplexes are one of the world’s greatest revenue producers for real estate investors. Their flexibility of design, earning potential as an investment property, smaller footprint on a plot of land, and many other factors contribute to their success as an investment property.

Let’s dive deeper into some of the advantages of a townhouse or duplex as a rental property.

The Benefits of Buying a Duplex

There are myriad benefits of adding a duplex to your rental property portfolio. Let’s go over some of them below.

One Building, Two Income Streams

One of the main advantages of full duplex rentals is that a single building produces two income streams. Because a duplex is classified as two separate living spaces contained within four walls and sharing a common wall (or ceiling/floor if they are built in a stack), you need only buy or build a duplex as a single building. Then, if you rent out the full duplex, you’ll receive two income streams for the price of a single building.

Half-Duplex Rental Options

Unlike buying or building standalone semi-detached housing, one of the advantages of buying a duplex is that you have the option to live in one side, while renting out the other. Sharing a central wall with another family or persons isn’t always ideal, but one of the advantages of a half-duplex rental is that you’ll still receive income to help you cover the overall costs of living in your side of the duplex. If you’re just starting out on the property ladder, with a family that needs the space provided by a duplex, then renting half of your duplex makes great financial sense.

More Square Metres Per Dollar

Because duplexes offer the design versatility of side-by-each or being built as a stack, you can get more square metres in a single structure, maximising how far your investment will go. Building a duplex as a stack also lets you buy smaller parcels of land, reducing your immediate overheads.

High Rental Yields

If you’re looking for a high-yield property, then a duplex is one of the highest rental yield properties in the country at the moment – with a rental yield of between 6 and 7+%! They’re a great way to make money in a location where rentals are sorely needed.

Potential Risks of Buying a Duplex

However, purchasing a duplex isn’t always sunshine and rainbows. There are still some potential risks. We’ve discussed them below.

High Maintenance

This is true of almost any type of property you invest in, but duplexes can involve a lot of maintenance. From lawn care to plumbing and electrical problems, as well as things being broken (duplexes sometimes are rented with young children, and well, things happen!). There’s sometimes a lot of overheads and maintenance when you own a duplex.

Your Availability and Responsibility

If you choose to live in one half of your duplex, you may find yourself expected to be at the beck and call of your neighbours constantly. As a landlord, you do have a responsibility to respond to problems brought forth by your tenants. However, you may find yourself with tenants who expect you to drop everything and run to their aid, as you only live next door. Avoid this by establishing clear written guidelines in any rental agreement as to when you are and are not available to assist with issues they may have.

Noise Travels

A well-designed, well-built and well-insulated wall may not have as much of a noise issue, but beware that noise travels and you may be able to hear your neighbours. Or, if you’re renting out the full duplex, you may have to deal with issues of noise from one side affecting the sleep/routines of the other.

Are Duplex Homes Right For You?

Building or buying a duplex home is a fantastic option for seasoned real estate investors looking for their next assured income stream or for middle-class families looking to cut down on their living expenses by making their next home a duplex with a half-duplex rental.

Their lower building costs, smaller footprint, and flexibility of use make them wonderful investments for both short—and long-term buyers.

Final Thoughts

If you’ve been searching for a new home, but want something you can rent out while living on one side, then a duplex house is a no-brainer! Alternatively, their high rental yield nationwide makes them ripe picking for real estate investors who want a guaranteed rental property for less than the price of building a home.

If you have any questions about our duplex building options, contact us at Worthington Homes to set up your initial consultation and let us help you get your duplex dream up and running!

Frequently Asked Questions

It seems our clients are as crazy about duplexes as we are! Here are some of our most frequently asked questions about investing in a duplex.

Is a Duplex a Good or Bad Investment?

Typically, duplexes are one of the soundest real estate investments you could make. They have a high rental-yield, are cheaper to build on a smaller land plot than a traditional house, and create two streams of revenue from one building. Despite their upkeep cost in both time and money, duplexes are fantastic investment opportunities for would-be landlords of all stripes.

Why Would Someone Want to Live in a Duplex?

Living in a duplex is a great way to save money on your overall cost of living by renting out one-half of the building. As you’ll be making an income from the tenant next door, your overall costs for keeping the hamster on the wheel, so to speak, will automatically be cut in half.

Living in a duplex also provides you with a great opportunity to know your neighbours and maybe make a new friend!

Do Duplexes Depreciate?

Like any other property, duplexes will depreciate over time. However, as an owner of a duplex that you rent out both sides of, you can claim that as a tax depreciation. Beware, if you’re living in one side, but renting out the other, you won’t be able to claim the higher tax depreciation.