Duplex vs. Single Family Home: Which Is The Better Investment Property?

Just got the call.  The usual call about why you would want a $230,000 duplex rather than two $115,000 single family homes.  Maybe you would maybe you wouldn’t.  Once again;

Single Family Home Advantages

Single family homes appreciate better than duplexes, by in large.  They attract a better class of tenant, by in large.  And they are more understandable to most people.

Duplex Advantages

Real quick there are two.  The first is that if half is empty the other half is still bringing in income.  That’s super important for an investment property.  The second is that the rents to price ratio is usually a little better in a duplex than a single family home.

There are other subtleties.  But those are the big differences.  Next we’ll do an analysis of both situations.  Stay tuned!

7 Comments

Filed under Real Estate Investing

7 responses to “Duplex vs. Single Family Home: Which Is The Better Investment Property?

  1. I’ll be interested in the next post to see what you think about the two situations.

  2. Another Investor

    Some markets have better located and better tenanted 2 to 4 units than others. There are very few areas in the greater Phoenix market where I would like to own a small multi-unit. They sell at a premium to uninformed investors who think they are moving up in income potential and are on their way to the big leagues. Thanks, but I will stick with houses.

    There are now areas where I can buy sub-$90,000 houses with good rental prospects and rents a little over 1 percent per month. If I wanted to go lower on the economic scale, I can buy sub-$70,000 houses with a little higher rent-to-value ratios. However, the market is still going down, and rents are softening because of the job losses. Right now I think my point of entry will be in 12 to 18 months. Stay tuned, though, because it will be an interesting trip as the new administration tries to right the economic ship.

  3. AI – Your feelings on this are well known to me and I appreciate them and your comments.

    To the uninitiated, AI and I do not always agree. But that’s okay because AI brings different geography, experience and goals to the table.

    We both agree that the point of REI is to make money…not to lose it. 😉

    I will say this about the KC market. I am finding many to most duplexes still over-valued. I’ve actually done analysis and changed my mind before…mostly in the last 6 months. By in large the SFHs are the better buys right now.

    But sometimes there are other factors which we will discuss when I do the anyalysises (is that even a word?) that will be coming up.

  4. Another Investor

    I suspect small multi-units are more common and more accepted in older areas, especially east of the Mississippi. Kansas City is an older city that has more in common with the cities to the east. In the west and southwest, 2-4 units are generally in inferior areas with low-end tenants. Large apartment complexes in good locations with lots of amenities attract the young, well heeled tenants. Once these folks settle down, they usually buy or rent a single family home.

    I buy property based on how much money I think I will make on it. I’ll bet Chris is going to show us some duplexes that have the potential to make good money. I’m looking forward to his analyses!

  5. jon

    fyi – the expression is ” by and large” , not ” by in large”.
    it come from old sailing terms.
    http://www.worldwidewords.org/qa/qa-bya1.htm

  6. jon

    and I even have my typos:)
    ….comes from, not come from.

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