Duplex – a better investment than a condo or single family home?

OK, so based on the title of this site, you can guess that I’m in the pro-duplex camp. I already bought one, so if anyone tells me it’s a poor investment, I’m not likely to want to hear what they have to say.

I ran across an article today, however, that points out that the duplex is a unique (and relatively scarce) investment and place to live.

Scarcity and uniqueness
Think about all of the development that’s been going on lately — subdivisions full of single family homes and attached “townhouses” (if you can call them that in a new subdivision), and huge towers of condos. Very few new developments include two-family homes with a nice private yard and a garage, on a regular city lot.

But unlike apartments, condominiums or even single-family houses, duplexes are not as prone to overbuilding, which can help enhance their value so long as demand is strong.

According to U.S. census data, there were only about 4.99 million two-unit structures in the U.S. in 2000, only slightly more than in 1990, when there were 4.95 million. By contrast, there were nearly 70 million detached single-family homes in 2000, up substantially from about 60 million in 1990. Buildings with 50 units or more also increased substantially, to 6.13 million in 2000 from 4.39 million in 1990.

It’s almost a house, and homier than an apartment
I know a real estate investor who, when renting out his first duplex, placed an ad under “apartments.” He got very few calls and was starting to get worried. He then realized that there was also a heading in the classifieds under “duplexes,” put his ad there, and the calls started coming in.

For someone who wants to get out of the “living on top of each other” situation that apartments sometimes feel like, or just wants a yard and a garage, duplexes are a nice fit. They’re cheaper than a whole house, but more “house-like” than an apartment. They’re especially attractive to renters with children, and people who want enough space to entertain guests.

It’s a unique investment
If you want to sell your duplex, you have three markets of buyers —

  1. Traditional real estate investors, who will buy the duplex to rent out
  2. People like me, who want to subsidize their cost of living by purchasing a duplex to live in half of, while renting out the other half. A lot of people do this, fix the property up, and then move out and hold onto it as an investment
  3. Buyers who want a single family home, but can’t find a good deal in an older neighborhood and are willing to buy a duplex and convert it to a (usually very large) single family home. For a while, some cities, trying to decrease density in urban areas actually gave subsidies to people who did just that.

But it’s not a sure bet. Here are some more pros and cons from the article

That doesn’t mean duplexes are always sure bets, though. Michael Carliner, an economist at the National Association of Home Builders, notes that duplexes probably had their heyday back in the 1920s and 1930s, when it was more common for strangers to share houses. After World War II, families tended to want more privacy, on large, suburban lots. And some renters prefer the luxury of a new, pristine apartment without a landlord next door. “If [duplexes] were such an attractive investment, they would be building more,” he says.

On the other hand, condos and apartments are more common in some places because they can be cheaper and easier to build, a phenomenon that has spelled trouble in the past, especially in the downturn of the late 1980s and early 1990s. In Boston, for example, condo prices dropped 20% between 1989 and 1991, compared to about 16% for single-family homes.

Another problem with condominiums is that they often are very much alike. That means that if you have to sell quickly in a down market, there’s a good chance there will be similar product available elsewhere, possibly even in your same building, putting you at a competitive disadvantage. Single-family homes and duplexes are often more unique, which could help them sell in troubled times.

“In general, I’d say [duplexes] are safer,” than many other properties, says Karl Case, an economist at Wellesley College and one of the founders of Fiserv CSW, one of the nation’s best-known home-price forecasters.

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One thought on “Duplex – a better investment than a condo or single family home?

  1. Rental prices are up and prtrepoy prices are down.I’m seeing it is less monthly cost to purchase a home than the cost of current monthly rental rates.I’m 52 and have a similar background with owning houses and rental properties as you do.In my opinion I agree with your statement, “Owning gives you a sense of pride and you can fix the place up the way you want”. There’s a lot to consider about working on our own homes I enjoy the work, I get the feeling of pride in my workmanship, I look forward to projects around my home. Entertaining friends and family in my home where we homeowners showcase our projects is a delight.Looking back to our roots, “The right to own prtrepoy” is a great sense of satisfaction.While home prices are low and interest rates are low, if it were me, I would buy a house.On the other hand since you’re retiring;if you have other hobbies or business interests where spending time in your home would be limited, or if you not positive on the your new re-locating destination Consider renting until you get settled into your new retirement mode and the variety of destination choices available to you in the Florida State.There’s an old saying I recall (author unknown), “Never sell your tools!”If you enjoy working on your home like me, do-it-yourself home remodeling is a skill I will more than likely never give up.Without my tools my skills are useless! That takes something away from us that was identified by the author that could be depressing. Even if I don’t work on my houses (I still have a couple rental units) full time like I use to, having my tools available to me “in case” I have a project or want to do a project is a big feeling of satisfaction.As far as the government, “stick their fingers in your business”, we’re connected whether we own or rent.What would be worse for me than the government,would be a landlord sticking their fingers in my business! Applying the 80/20 rule to landlords, 20% are proficient, therefore 80% are insufficient. As a previous landlord, if you decide to rent, interview the landlord as you used to interview your tenants.Of course, the prtrepoy would reflect the character of a landlord, 80% don’t pass the “smell test”. Congratulation on your retirement,Joe TrometerReferences : Was this answer helpful?

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