What property should you get into if you want to start investing in real estate? Most only think about a single family homes, however, there are so many different types of properties out there. Condos, commercial properties, strip malls, land, plazas, industrial, mixed-use, multi-unit. It can be overwhelming, and unless you have a mentor, which I talked about in one of my earlier videos, it can be very hard to know which property would be right for you when first starting out.
Luckily, you have me as your mentor, being that you’ve watched all my videos, are now a subscriber to my youtube channel, downloaded my $1 Million Dollar Real Estate Investing Blueprint, and enrolled in my Real Estate Investing Bootcamp. Watch below to find out.
So...... the best property to invest in. You ready for it?
It’s the Duplex!
Now, a duplex is a 2 unit property, meaning, 2 units under 1 roof. There are different types of duplexes too, the side by side duplex, which are by far the most popular and sought after. Then there are also duplexes where the units are on top of each other, one on the main, the other on the 2nd floor. Lastly, and although not legally called a duplex, a property where a unit was added to the basement of a single family home, or added to the back of the property. These additional units added to single family homes are usually called in-law suites, and you see these more and more, especially in major markets where places to rent are in high demand.
This is a great way to help pay for your mortgage, since the price of real estate is so high, and the extra income your in-law suite generates will help tremendously with your payments.
And that extra income, from having an extra unit, is why I love duplexes. It’s why I tell people whom are looking to invest in real estate, or even purchase there first property, to buy a duplex, because the extra income the other unit gets, or the inlaw suite you added to your basement gets, or the income both units get if you’re not living in the property, will generate much more income, will help pay your mortgage, and will build equity.
For now though, lets get talk about legal duplexes because there are items that I always want to make sure the property has when buying these.
For one, when buying a duplex, the property always has a higher chance of generating a recurring income. Whereas when purchasing a single family home, and the tenant moves out, well since the property is now vacant, its making no money at all. With a duplex though, if a tenant moves out and as a result the 1 unit is now vacant, you still have the other unit’s income to cover your costs.
The other great thing about duplexes is the fact that you are buying a property that generates more income compared to the price.
Let me explain.
Lets say your looking at a single family home, and I’ll use my market of Windsor, ON as an example, such as this one, currently listed for $200,000, but there is also a duplex for sale nearby, such as this one, for $180K. When you break it out on a per unit basis, when you buy the duplex, you are really getting 2 homes for $90K, vs 1 home, the single family home, for $200K. This is why I love duplexes, cause you can own 2 homes for a lower price then the 1 home. Sure, you might not get the same amount of rent when you look at it on a per unit basis when compared to the home, however, when you add the 2 units incomes together, it is almost always more.
Of course, you’re going to want to confirm that the duplex generates a better return then the single family home based on the income and the price, and a great way to do that is by using the cap rate and the cash one cash return financial calculation, which I will talk about in next weeks video.
So, there you have it, why the duplex is the best property to invest in, and to be honest, I own a bunch of these, and their really no more headaches then when owning a single family property. In fact, its actually better because all the issues and repairs are under 1 roof, making it easier to manage, vs having 2 homes in different areas possibly.
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