One of the more beautiful aspects of real estate investing is the versatility and flexibility. It doesn’t matter what your goals, interests, or expectations are, you may select from a variety of investment vehicles and opportunities to pursue.
Although a significant percentage of investors in Austin real estate focus on single-family residential properties, there’s plenty to be said for multifamily housing. Specifically, you can score big by acquiring duplexes.
Duplexes have become extremely popular in the United States. According to the National Multifamily Housing Council, roughly one in five households live in a duplex (or quadplex).
So even if you may not be very familiar with them, you can rest assured there is plenty of interest in the marketplace. As the name suggests, these properties are essentially two private homes in one. They feature a shared wall between the two units, and each is typically a mirror image of the other.
“Duplex buildings also have two separate entrances for each unit. This means each tenant has their own entrance,” ApartmentGuide.com notes. “An example of a duplex is a house with two doors side-by-side that enter into different living spaces in one home, one upstairs and one downstairs. These two separate units are typically similar in size.”
The biggest difference between a duplex and a townhouse, condo, or apartment is ownership. The latter three property types are divided among multiple people (meaning one person owns each individual unit). With a duplex, one owner possesses both units.
In terms of investing in a duplex, ownership typically plays out in one of several ways.
Option 1: Renting Both Units. With this approach, you treat the duplex like any other investment property (such as a single-family home). Both units are rented out, separately to different tenants, and you enjoy an income stream from both each month. The benefit of this approach is that you get to maximize your revenue and generate twice the income on the property.
Option 2: Living in One Unit. Under this approach, you rent out one unit and live in the other. The ideal goal is for the other tenant to pay the entire mortgage on both units. This gives you a free place to live, basically, while paying down your mortgage. Many Austin investors do this for several years and eventually rent out both units to tenants.
Depending on your situation and needs, either of these options might work. It’s up to you to identify your goals and devise a clear investment strategy that allows you to maximize your ROI.
If you talk to many real estate investors, most of them will readily encourage both first-time and experienced colleagues to give duplexes a try. Here are some of the reasons:
As beneficial as a duplex can be, it also features challenges that may be difficult for you to manage. If nothing else, these “cons” might make you rethink how you approach the situation.
Owning two units – regardless of whether you live in one of them or not – creates real needs and responsibilities. Unless you have a fair amount of spare time (plus the emotional energy) to dedicate to screening tenants, collecting rent, dealing with maintenance issues, handling repairs, and addressing tenant concerns, you may end up exhausted and frustrated with your duplex investment.
But here’s the sweetener: You don’t have to do it on your own. At Green Residential, we make Austin property management a breeze.
We founded our company on the premise that real estate investors should have a reliable, trustworthy, and cost-effective way to manage their rental properties without unnecessarily eroding their returns.
If you’re interested in learning more about our Austin property management services, we would love to learn more about you. Contact us today to get started!
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