HOW TO FIND DUPLEXES FOR SALE NEAR ME TO INVEST IN
Duplexes Are Excellent Real Estate Investments
The investment value of owning a Duplex rental property can help a real estate investor in several ways. When the real estate market is strong, a rental duplex can be a valuable asset. The duplex’s asset value increases over time providing additional equity against any debt which may exist. That means buying power when it comes time to acquire another rental property. Income from a duplex covers the mortgage payment and also provides additional revenue to offset repairs and maintenance. In other words, the investment pays for itself as it grows in value.
Two Kinds of Duplex Rental Property
Duplexes are divided into two types – occupied by the owner and unoccupied by the owner. In other words, some duplexes are part of a home that has been divided into two separate living areas. Sometimes it’s a basement apartment and other times it is a part of the structure that has been walled off and remodeled to include a kitchen or other needed spaces. The other type of duplex is a building designed to be two separate households with each side rented out to a tenant. Each form of duplex design has its benefits and drawbacks:
Owner-occupied Rental Duplex- The Pros
A building that has been remodeled to include a rental apartment works well for many real estate investors for many reasons. The first reason is the cost to acquire. Since the home is already owned there is no acquisition cost for property and building. Next, the remodeling can usually be done for a more manageable amount of expense and for a homeowner who is looking to augment or offset their mortgage payment, it’s a great idea. The third reason is convenience. Whenever anything goes wrong and repairs or maintenance must be performed, it can be readily accomplished. Converting a home into a duplex is also convenient if there are family members in need of supervision or care. A family member can live more comfortably and with proper support while spending less money renting from a non-family member. There is a final reason for converting a home into a duplex and that’s tax benefits. Depreciation and other expenses can be deducted from the rental unit’s income reducing the owner’s tax liabilities.
Owner-occupied Rental Duplex – The Cons
Living next door to a tenant can be trying at times. Some tenants are going to want more attention to maintenance or repairs requesting help more often than it is necessary. Also, some tenants don’t like having their landlord right next door, it’s too close for their comfort. Accessibility and tenant issues can become problematic if there are personality conflicts or financial problems with getting the rent paid. Another potential problem is occupancy. The apartment may not always be occupied and that can affect the owner’s budget and cash flow. The final issues are around documentation and paperwork. Many municipalities require business licenses, housing reports, property inspections, and other information which takes time and money to satisfy.
Fully Rented Duplex – The Pros
If a duplex rental property has two tenants, it is an investment with clear objectives – revenue and profit. Duplex investment owners seek a long-term benefit from ownership that includes improved cash-flow and enhanced asset or equity value. Over time, as an investment property matures, the debt against the property decreases as the value of the real estate increases. That means as an investment, the value grows in two directions at the same time. That’s what attracts so many people to invest in duplex properties. Depending on the type of financing the owner chooses, the opportunities for increasing asset value can be utilized to help acquire additional duplex rental properties over time. Once again, the tax benefits can be substantial to the owner of the property as a business.
Fully Rented Duplex- The Cons
As an investment property, the costs of acquisition, maintenance, mortgage interest, property taxes, and other expenses must be paid from the rental revenues with money left over for the owner to receive the ultimate benefit of the investment. That makes the costs the driving factor in calculating the rental amount charged. Depending upon local rental property density and pricing the calculation to establish profitability may place a rental duplex out of the market range when it comes time buy or to sell a property. This is rare, but it can occur if the local economy is struggling. Another issue can be cash flow when a unit is unoccupied. Some rental markets are quite competitive and the tenancy is never a problem while other markets experience fluctuations due to extraneous factors. Owners need to have adequate capital to provide for times when the unit is unoccupied or in need of repair or maintenance.
How Can I Find Duplexes Near Me to Invest In?
There are several resources available that can be used to identify and locate investment duplexes for sale.
1) Internet Search – Many investors look toward the Internet to find available properties in their area. Listing services like Craigslist.com, LoopNet.com, Zillow.com, Realtor.com, and PropertyShark.com are online with information on properties listed by town or city.
2) Real Estate Agent – Local Real Estate companies list duplexes utilizing local property listing services as well as placing ads on the internet. Most real estate websites offer photographic and video walk-throughs of properties providing valuable information for investors considering different opportunities.
3) Investment Groups – Due to the popularity of investing in real estate and duplex rental properties, many private groups network to find available investment properties. While competitors in some ways, these groups offer information, resources, and the opportunity to learn valuable lessons from experienced investors.
4) Friends and Family – Frequently, when a duplex comes available on the market, friends and family find out about it before anyone else does. Letting friends and family know you’re in the market to find a rental duplex investment property can often generate valuable leads on lesser-known or hard-to-find investment opportunities.
5) Go for a Drive – A lot of duplex sellers don’t want the cost of bringing a real estate agent into the mix. There are often private sellers who put a sign out on the lawn and wait for the phone to ring. Driving through potential neighborhoods and looking for the for sale signs can produce excellent results and keep acquisition costs under control as well.
I Found a Duplex! Now What?
Finding a duplex rental property to invest in is one thing; making sure it’s the right investment is another. Rental duplexes are like any other business, they have to produce a profit or they’re just a really expensive hobby. Producing profit means all the costs and expenses to own and maintain the property must be identified and considered. The age of the property, the condition of the property, rental rates, occupancy history, and many other factors must be considered and calculated before deciding to invest. The duplex’s previous owner should be able to provide the cash flow information but buyers need to beware because some property owners will fudge the numbers to make things look more attractive. It’s important to perform in-depth due diligence on the property to arrive at the best decision.
Duplex Property Investment Help is Available
There are a lot of factors involved in the decision to purchase a duplex rental property or to convert a home into a duplex to rent. Investors need to confirm all the information relative to a property before deciding to invest. The investor needs to walk through the property to determine the condition of the structure and suitability for the investment. When a property is located out of town from the buyer’s location, there are property inspection services that can perform the walk-through and provide a report on important components in the property like furnaces, air conditioners, water heaters, plumbing, electrical, roofing, and a variety of other concerns. A professional second opinion is a valuable tool when it comes to investing in real estate.
Is a Duplex a good investment for a beginner?
Investors new to real estate opportunities like duplex ownership will find that this is a good way to get your feet wet with real estate investing. A small property like a duplex is a better way to get started than a large apartment building with 10 to 20 tenants or more. Tenants can be quite difficult to deal with sometimes and starting out with only 1 or 2 can be all you may want to handle. Starting out with a duplex is the way most investors get going and is a good idea. If you find that you like it and can handle more, then you can step up to larger properties.
How to Finance a Duplex?
With all the resources and information available on the internet, there’s no reason to wonder about how to finance your duplex. The Professional, knowledgeable, and friendly staff at Neal Business Funding are ready to answer any questions and help every investor achieve their personal goals. We have answers to any questions you may have about getting a loan for a duplex. Contact us and find out for yourself why our clients keep coming back to Neal Business Funding.