You might want to ask, is buying a duplex a good investment?
Well, here is the truth – investing in real estate is always a good idea; be it a flat apartment, a duplex, an office space, commercial property or even something as basic as a plot of land. There are so many ways of making good profit from real estate investments.
But first, what is a Duplex?
A duplex is basically a residential building which is partitioned into two apartment units. These units are joined together and share a common wall. A duplex can be sold as a commercial, residential or multi-family property. It all depends on the purpose for which you are buying or owning a duplex.
Many beginners in real estate see buying a duplex as a good investment strategy. This is majorly because they are given the option of renting out a portion of the house. And it is no news that the investment value of buying a duplex in Nigeria or anywhere else in the world is quite high.
In as much as duplexes are luxury homes mostly, people invest in real estate using different strategies.
If you are planning on buying a duplex and still skeptical, the goal of this article is to help you explore the pros and cons of buying a duplex.
With buying a duplex, you just might end up killing two birds with one stone.
That is, you have the option of buying a duplex as an investment property, since a duplex has two apartment units, you can take one part for your family and rent out the other unit.
This can generate a very good income for you monthly or annually.
So, if you are investing in real estate for the first time, this is certainly a good idea.
The benefits you get from renting out one area of the building can help with offsetting some part of the mortgage or even pay it off completely.
Your rental income can also help you in working towards financial freedom.
Say for instance, you purchase a duplex and have a mortgage of N540,000 monthly and you rent out a portion of the house for N420,000, all you will require is N120,000 extra to take care of the mortgage every month.
Does that make sense? Certainly, yes!
So, having to leverage on mortgages is very important in real estate.
Increase in Value
Real estate is one of the most traditional forms of wealth investment.
Buying a duplex in an opulent neighbourhood with high increase in property appreciation, will guarantee multiplied returns.
In most cases, the value of a duplex is not affected by the real estate marketplace as long as the rent value remains unchanged.
When buying a property, location and neighbourhood are primary factors to consider.
The thought of living in a duplex comes with comfort and of course, class, especially if it is situated in an upscale neighbourhood.
Some duplexes are completely furnished. Having features like landscaped gardens, electronic security, swimming pools and much more are very important for your comfort.
Dealing With Tenants
If you finally decide on buying a duplex with the aim of making it an investment property by renting out a unit, you must be ready to deal with tenants.
Although not everyone can deal with the stress that comes with some tenants, as some of them can be quite troublesome.
One good way of dealing with tenants is by making every rule clear in the tenancy agreement and ensuring they are aware that defaulting on the agreement will result to getting a quit notice.
Maintenance and External Renovations
This is part of being a landlord.
Maintaining the entire building is on you, including the cost. The home staging process is your responsibility as well.
This means that you are expected to clean up the apartment properly before putting it out for rent. From maintenance, renovations, repairs, cleaning and other duties of a landlord.
This is why you should give a good thought and plan properly before deciding on whether or not you want to invest in buying a duplex.
Also know that, the responsibility of being a landlord is not for the faint-hearted. That is, in some situations, problems may arise on short notice and you should be ready to fix it.
Lack of Tenants
This is an important factor to consider when buying a duplex.
Most beginners in real estate tend to make the mistake of buying a property without considering the risk of not getting a tenant.
Sometimes, it is as a result of where the property is located. It may not be in a viable location with high demand, and as a result of this, may affect the rate at which people search for properties.
For whatever reason it is you are buying a duplex, investing in real estate yields huge returns in different ways.
Although Investments come with risk, consider the cons and pros in order to make an informed decision.