While the current economic environment has caused many Americans to default on their home loans, there are some who are using the crisis as an opportunity to invest in real estate. While there are many options available, investing in a duplex is a better option for three simple reasons: value, appreciation, and cash flow. Understanding these three factors can help you see why you should use your investment funds for duplexes as opposed to single family homes.
First, consider how the value of a duplex is determined Unlike single family homes, whose value is based on current market prices, duplexes are actually valued based on their cash flow. This means that while single family home values are tanking, duplexes keep the same value.
Second, consider the appreciation value of the home. Remember, that because the value of the home isn’t based on current market conditions, duplexes will continue to appreciate, even in poor markets. This makes a duplex a far better investment than other types of real estate.
Finally, consider the cash flow generated by a duplex. If you are renting the units out, you will have twice the rental income when compared to a single family home. Because duplexes are two-family dwellings, you can choose to rent both units out or to rent one out and live in the other. Either way creates a positive cash flow.
If you have money to invest, you may want to consider purchasing duplex home to rent out. It meets the test of value, appreciation, and cash flow, making it the perfect investment.
