Living in and renting out a duplex has been around since the term duplexes was coined. Before being used as a lucrative investment tool, it was common practice for an individual to purchase a duplex and rent out the empty space to a tenant.
What are the advantages and disadvantages?
- Managing your tenants: Some landlords love this, others hate it. The ability to be able to keep an eagle eye watch on what your tenants are up to can be see to some as a key advantage. But this close proximity to your tenants means your tenants can bring up every little issue they come across. From a leaky tap to broken light bulb, you're living in the same building and expect their minor issues to be fixed ASAP. It's true that problems with the building will be your problem to attend to, but might not require them knocking on your door every second day to follow up on.
- You receive a rental income: By renting our half you're duplex, you'll receive monthly passive income that can help with your mortgage fees and other expenses, and that will over time contribute towards your equity.
- Moving out: Of course the moment you decide to move out, you've then got another vacant unit to rent out. This also helps if one of the two units decides one day to move out leaving you with half the expected rental income.
- No condo fees: If you're used to condo living, then you would know that condo fees manage all the major repairs and ongoing maintenance of the building. You're your own building manager. Major repairs can put you out thousands of dollars. It's important to plan ahead and have your own contingency fund to ensure repairs happen on time and without the need to re-apply for an additional loan.
As we can see there are more advantages than disadvantages, provided you're up to the job of being your own on-site landlord. For first time investors/buyers this can be a great move so they are able to buy a larger building and start their rental empire but still being able to living in a home that they own.
If you're thinking about buying a duplex and already working with a broker, they will help you find a duplex which meets your investment goals/objectives. Otherwise you can always consider setting up a Property Alert and get notified when a duplex meeting your investment criteria hits the market.