Investing smartly in the world of real estate is a great way to grow your wealth.
Duplexes in particular are a powerful asset to have in your real estate portfolio, especially thanks to the fact that they often appreciate in value in ways traditional single-family homes, condos, and apartments cannot.
For starters, these properties are significantly more scarce than other residential rental properties. Combine that with the instant income generating potential and the insultation duplexes enjoy from (most) real estate downturns and its not hard to see why so many like to invest in them.
At the same time, you need to be strategic about the duplexes that you are invest in.
According to information from the US Census, there are only about 5 million dual unit structures in the United States – across the entirety of the country.
That makes these properties pretty rare, and you’ll need to make sure that the duplexes you are investing in have the best chance to produce income straightaway but will also grow in value going forward.
Let’s explore how duplexes appreciate a little more in depth below.
Scarcity Drives Values Higher
As we just mentioned a moment ago, there aren’t anywhere near as many duplexes available to invest in in the United States compared to other forms of real estate.
Single-family homes, apartments, condos, townhouses, and commercial properties are readily available and found pretty much everywhere. But duplexes are a bit of a “rare bird”.
This scarcity helps to drive the value of these properties higher, especially when they are located in prime real estate locations.
Duplexes that are surrounded by homes (as opposed to those built next to apartment buildings or townhouses) consistently have higher values than single-family properties in the same neighborhood.
When given a choice, folks would love to rent half a home than live in a tiny little apartment or condo – and the demand for duplex living is always there again in large part because of the scarcity of these properties across the country.
Instant Income Generating Potential
Another big piece of the puzzle behind the appreciation of duplex properties is the income generating potential these investments provide straightaway.
Unlike other rental properties (both the residential and commercial spaces) you won’t have a tough time finding tenants for your duplex.
You’ll be able to live on one side and (usually) can have the other tenants covering the entire mortgage – basically living for free while you are paying down the debt on your duplex mortgage at the same time.
Of course, if you already are living elsewhere you can rent both halves of the duplex (usually for more than traditional apartment/condo rent) and pay down the mortgage even faster.
Duplex properties cost a little more than single-family homes on average – but not all that much – giving you significantly more income generating potential straightaway.
One of the biggest challenges in getting into real estate from a wealth generation standpoint is getting positive cash flow up and running.
Taking out a mortgage for a property always involves a significant amount of debt.
You want to be sure that you have the cash flow to cover those debt payments ASAP, and duplexes provide that for sure.
Insulated from (Most) Traditional Real Estate Downturns
Duplexes behave a lot more like commercial real estate compared to single-family home properties as far as real estate values are concerned, particularly with real estate downturns.
They look a lot like single-family homes, they provide much of the same functionality, and are almost always located in those kinds of residential neighborhoods.
But when the market goes south on single-family homes your duplex is going to have its value insulated more than the homes are around it – in large part because it is an investment vehicle and an income generator.
This kind of asset protection is highly prized by savvy real estate investors.
The last thing anyone wants to worry about is getting into the market at the wrong time, having a downturn wash away the value of their real estate portfolio, and then having to wait (sometimes years) for the market to rebound.
We aren’t suggesting that duplexes are immune to real estate downturns. That’s certainly not the case.
These properties can and do lose value when the market turns.
It’s just that these kinds of properties have a better insulation against these kinds of negative effects while still reaping all the rewards of real estate growth periods that boost the value of your property and help it appreciate even faster.
Do duplexes appreciate?
You bet they do!
If you can add them to your real estate portfolio you’ll be in a prime position to create the kind of financial future you’ve always dreamed of a little faster than you might have been able to otherwise.