Reasons Why Investing in a Duplex Is a Good Idea

So, you are looking to buy a home and you are thinking about buying a duplex. You realized that you can use the rent to offset some expenses and hopefully you will be able to save a lot more money or even live for free! Except, you keep hearing horror stories about evictions, fixing toilets, and all the problems with owning rental property.

Owning rental property is never something to be taken lightly, even if it’s just one unit attached to where you live. That being said, it is probably one of the greatest ideas and it’s one of the best ways to generate real wealth. Here are 3 major reasons why you should go ahead and get that duplex:

A Duplex Costs the Same as a Single Family Residence but You Earn Passive Income.

You still have one roof, one foundation, one tax bill and one plot of land to maintain. Hopefully the utilities are sub-metered but if they aren’t you can split that too. Realistically, the cost to own the property is similar to that of owning a single family home, or just slightly higher, but you also receive rental income.

Let’s look at an example. Say your yearly expenses on a single family home are:

Maintenance – $1000
Repairs – $1000
Taxes – $2000
Mortgage – $7000
Insurance – $1200
Total – $12,200

Now, even if we use a crazy number and assume all the expenses are 25% higher for a duplex (this is unrealistically high, but I’m using it to illustrate a point), your new expenses are

Maintenance – $1250
Repairs – $1250
Taxes – $2500
Mortgage – $8750
Insurance – $1500
Total Expenses- $15,250
Income ($1000/month) – $12,000
Profit/Loss – ($3,250)

By having a duplex in this example, you are saving $8950 a year ($12200-3250). So, even though you are still spending money each year, you are actually saving a lot! You can use that savings to pay bills, invest, pay for college, or anything else you want to do.

A Duplex can Build Wealth and a Single Family can not

Alright, let’s run through a quick math exercise. Let’s say the above example is for a house worth $150,000, your mortgage is at 4% and the national average for appreciation of homes is around 3% per year.

Single Family Residence:

Appreciation: $4,500
Costs: $11,200 (I took out principal payments)
Change in net worth: -$6,700

Duplex:

Appreciation: $4,500
Costs: $12,500 (I also took out principal payments)
Income: $12,000
Change in net worth: $4000

Every house and duplex will have a different set of numbers. Though some duplex’s will give you a negative value, you will always have a better result with a duplex than with a single family home. The fact is, a home is a 100% liability because it costs money to maintain but never provides any income. The duplex is half asset and half liability because half of your home is actually providing you passive income.

A Duplex is an Asset and Will Continue to Pay You Passively Even After You Move Out

Most people will eventually move out of their first home and into a second home. Usually people sell the first home in order to afford the second home and thus incur attorneys fees, taxes, selling fees, and other expenses that can quickly add up to 10% of the home value.

Even if you rent out the single family home, it most likely won’t generate enough income to cover the expenses. Even if it did, the mortgage company wouldn’t use that income to help you qualify for a new loan because you have no experience or history as a landlord.

If you ever moved out of the duplex it is very likely that it will pay you a good profit every month. Additionally, the rental income will actually help you qualify for a bigger loan for your next home because you will have years worth of rent income and experience as a landlord to show to the lender.

In this example, if you moved and rented both sides, you would be earning an additional $8750/year or $729/month. This helps significantly when qualifying for your next loan!

Summary

A duplex costs nearly the same as a single family residence, provides you income, and is a lasting asset that will generate income for years to come. There is very little reason why you shouldn’t buy.

I’m 30; I’m retired. You can be too.

I run a website dedicated to educating people in investing, real estate, and building passive income. I started investing in real estate at the age of 24 and now I’m retired at age 30. Please check out my website to find a lot more interesting analysis about investing. I also have information about real estate, stocks, and other sources of income.

How To Make Money and Earn Handsome Capital

When it comes to the most popular investment destinations in Chennai, the localities in the South of Chennai have been one of the most favoured locations for a multitude of reasons, one of them being its proximity to the buzzing Outer Ring Road (ORR), Vandalur, the Vandalur – Kelambakkam main road, the Oragadam- Sriperumbudur Road and significantly Tambaram.

Urapakkam has been at the forefront of driving the housing/residential market in an upward trend, mainly because Urapakkam is considered a highly affordable solution besides which the accessibility is unparalleled. Coming within the Kanchipuram district, Urapakkam is central between the key locations of Vandalur and Guduvanchery.

What’s more, Urapakkam affords quick connectivity to the key GST road (Grand Southern Trunk road), the Chennai airport and the Tambaram railway station. Employees working in the corporates housed in SEZ’s such as the Mahindra City or at the plethora of corporate houses on the IT corridor/Old Mahabalipuram Road (OMR), in Oragadam and Sriperumbudur. Roads from Urapakkam lead to Oragadam and Sriperumbudur within a short travel time of 35-45 minutes.

Why the location is great from every angle-

Urapakkam is perfect for those who are looking at purchasing houses starting with a price range of 15 lakhs and upwards. Even in respect of those looking at earning handsome rental returns, Urapakkam has shown a consistent demand as most employees appreciate the fact that the rentals are affordable, the office to home commute is easy and hassle free and there are many options for recreational and convenience facilities such as schools, colleges and hospitals close at hand.

Urapakkam is amply connected via the suburban, a well-connected rail network with local trains such as the Chennai Beach-Tambaram-Chengalpattu line carrying many passengers on a daily basis. Besides, Urapakkam has its own railway station and that is its biggest plus.

The road network is interconnected to all the main arteries of Chennai, moreover the roads are well-kept with a good surrounding infrastructure and there are regular shuttle services that ply for most of the IT companies located close by.

Great Going Guduvanchery

The next locality focus is Guduvanchery and for good reason as not only has this area been lauded recently for its close proximity to Tambaram but also the fact that many industries and IT MNC’s are located at hop, skip and jump distances from here.

Why the location is great from every angle-

Similar to Urapakkam, Guduvanchery is considered to be a reasonably priced residential market with many options for mixed 1/2/3 BHK apartments with prices starting from Rs 20 lakhs and upwards. Besides, the projects here are replete with all amenities and civic facilities that families would need for a comfortable stay.

The number of industries, SEZ corridors and corporate houses at OMR and Oragadam are going to see manifold rise in investments and consequently the number of employees.

Falling within the Chengalpattu taluk of Chennai, Guduvanchery is just 8 Kms from Tambaram, 21 Kms from Chengalpattu and 28 Kms from Velachery. Well-connected, Guduvanchery is located at an approximate distance of 35 Kms from city centre of Chennai. Oragadam, the automobile hub of Chennai, is just 35 minutes away via the Chennai Theni Highway.