(This advanced blog summarizes real estate investing tips and insights Lofty AI has acquired from working with thousands of investors and institutional funds.)
Why buy a duplex?
If you're a first-time investor, you're likely wondering how to start real estate investing and how to make money from real estate investing.
You're also likely wondering which property type to buy.
Buy a duplex. It's that simple.
A duplex is a house consisting of two units with two separate entrances.
Over time, we've seen first-time investors succeed the most when they buy a duplex for sale as their first property.
I'll explain 6 reasons why you should be looking for a duplex to buy below:
1. House hacking
House hacking means that you live in one unit and rent out the unit next-door for cash flow.
With this method, you get to live in your investment property while also keeping an eye on it at all times. House hacking is the perfect scenario for a first-time investor wanting to know how to learn real estate investing.
If you're wondering how to become an investor in real estate, house hacking a duplex is a great place to start.
2. Keep watch on your property 24/7
It's much easier to keep an eye on your property and tenant when your unit is connected to theirs. This is a great way to get started after you ideally find a cheap duplex for sale.
3. You might end up with a better tenant
You will probably rule out most bad tenants that pay late and party into the night because they know they'll be living next to their landlord.
You will also be less likely to encounter a hold over tenant.
A holdover tenancy is when a tenant continues to live in a property after his or her lease has expired, without the landlord’s explicit permission.
4. Mortgage advantages
Mortgage companies tend to give better interest rates to people buying a property they will also live in. They also consider a duplex as one property which can help you get a better rate as well.
Many lenders will even allow you to include part of the potential rent into your income when qualifying for a mortgage.
5. Low cost
Duplexes for sale are generally located in affordable areas primed for growth. This makes them an excellent investment for a first-time real estate investor.
6. Rent to a family member
You can rent the additional unit to a family member who needs more supervision, instead of them moving into a nursing home.
This sort of living situation works well for many families. You have your beloved family members close by, they maintain their independence, and everyone has some privacy.
Townhouse vs Duplex
The duplex vs townhouse debate is often brought up on real estate investing web sites.
We've already discussed the benefits of buying a duplex, so now let's talk about townhomes.
A townhouse is defined as single-family dwellings that shares a wall with another house. Townhouses are designed in rows, so tenants usually share at least one wall. It’s common for townhouses to have two or more stories.
Townhouses have a few advantages vs. duplexes including:
- Communal areas for residents of the townhouse community to gather
- Certain types of maintenance and trash removal are handled by the Home Owners Association (HOA)
- Less expensive, since you're only buying one unit instead of two
Besides that, there are many more reasons why investing in a duplex will work out better than investing in a townhouse.
- Ability to house-hack
- More appreciation
- No HOA fees
- Mortgage advantages
- Lower cost
Remember: It's not that townhomes are inherently bad investments. You could invest in townhouses and do perfectly well for yourself.
But, you shouldn't be thinking about whether a property type is a good investment or not.
Instead, you want to think about how well a certain property type will do in comparison to other property types.
Townhouses are fine. Duplexes are much better.
Buy a duplex with Lofty AI
At Lofty AI, we show you cash-flowing duplexes located in neighborhoods primed for rapid appreciation, in just seconds.
Just toggle on the “2+ units” filter, and you’ll immediately see duplexes that are cash-flowing, undervalued, & located in growing neighborhoods in over 30 markets.
You can even find motivated sellers that are desperate to sell their duplex. When you come across a motivated seller, it allows you to make a low-ball offer that will likely be accepted.
Lofty AI isn't the only real estate investing platform out there to find duplexes. But, it's definitely the quickest and most accurate.
If you're interested in learning more, request access below.