Duplex Investing: Unlocking Potential for Real Estate Investors

Real estate investors have many options when it comes to investment opportunities. One of the most popular options, especially for those starting out, are duplexes. Investors are drawn to the idea of buying a duplex for various reasons, ranging from potential rental income to long-term financial growth. A major appeal to investors is that duplexes offer investors the opportunity to basically double their cash flow for less than the cost of two single-family homes.

What is a Duplex?

A duplex is a residential property with two separate living units, each equipped with its own entrance, kitchen, and bathroom facilities. Duplexes stand in contrast to single-family homes and offer investors the potential for dual rental incomes. The units share the same plot of land and are sold as a single property. Duplexes often share the same utilities, which can help investors avoid doubling expenses over time when it comes to repairs – i.e. replacing a HVAC system.

Duplexes are classified as multifamily properties; however, at Lima One they are eligible for traditional fix and flip, bridge, or rental financing. To qualify for traditional multifamily investment financing a property must have at least five units.

Types of Duplexes

Standard Duplexes

  • A standard duplex has two units in a two-story house with stairs connecting the two levels. The upstairs is usually where the bedrooms are, and the lower level usually holds the kitchen and living area.

Ground Duplexes

  • This is also a two-story, two-unit house, but with the levels swapped in a ground duplex. The bedrooms are on the bottom level, while the kitchen and living area are on the top level. The wiring and plumbing are also set up differently, and the lower level opens to the backyard.

Low-Rise Duplexes

  • Unlike ground and standard duplexes, low-rise duplexes have three stories—two main levels and a lofted attic over the second story. This attic is often the second unit of the duplex. Balconies are commonly found on the second story, and the footprint of the property is smaller with more emphasis on the lot itself.

Is a Duplex a Good Investment?

Investors often grapple with the question of whether a duplex is a good investment. The potential returns on duplex investing are substantial, primarily driven by rental income and property appreciation.

To determine whether a duplex is a good investment, investors must be mindful of market conditions and consider the following:

  • Location: Is the property in a neighborhood with plenty of growth potential? Is the area safe, does it have good school systems, and are there plenty of nearby amenities?
  • Property Condition: How old is the property? What’s the condition? Will it need heavy or light rehab? What could renovations potentially cost?
  • Rental Demand: Do people want to rent homes in that area?
  • Market Research: What’s going on in the area? What are the market trends? What are the average property values? Are there any local rules and regulations?

Real estate investing isn’t “one size fits all.” For new investors, buying a duplex as an investment may be the best option. For a seasoned investor, a triplex, quadplex, or an even bigger property might be the way to scale their portfolio.

Investors should weigh the pros and cons based on their financial goals, risk tolerance, and commitment to property management to determine if they should purchase a duplex investment property.

How to Buy a Duplex

Investors exploring buying a duplex as an investment property should understand the options available for duplex financing. 

Conventional mortgage loans and FHA can be used to purchase duplexes and offer borrowers the option of a low down payment. Private lenders like Lima One can offer a variety of financing options including DSCR loans. Some investors are interested in house hacking (living in one unit while rehabbing or renting another). This strategy limits your financing options and rules out business-purpose investment loans like Lima One offers on non-owner-occupied properties.

Navigating the process of buying a duplex requires a strategic approach. Let’s break it down step by step. Investors looking to purchase a duplex should follow these key steps:

Helping Investors Make Informed Decisions

Buying a duplex offers a unique avenue for real estate investors. It can be a savvy move that creates financial growth while scaling an investment portfolio. 

From higher income to scalability, investing in a duplex creates a lot of potential benefits for investors. And when you work with the right lender, investing in duplexes, triplexes, and quads can add value to your investment portfolio.

Regardless of your investment strategy, Lima One is here to help. Our experienced team is here to help. We’ll provide you with extensive industry knowledge and private lending expertise and walk you through the loan options you qualify for.

Contact us today to discuss your next deal, or if you have a deal in hand, accelerate the process by applying now.