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2-Family Homes - Why Are They So Popular
by Jim Taylor on May 28, 2013
If you are looking for a profitable investment property or looking to upgrade to a new home, you might consider buying a two-family house rather than a single-family home. There are several advantages to investing in a two-family home that makes them popular choices for home buyers as well as landlords.
A Two-Family Home vs a Multifamily Complex
If you are looking to invest in a rental property, a two-family home is easier to rent than a multifamily apartment complex. One reason is the location. Most residential homes are located in quiet neighborhoods while apartment complexes can be located in busy downtown areas. Homes located in neighborhood areas are more likely to draw families because of their proximity to schools and parks. The layout of a two-family home is also more appealing to renters because they have the autonomy of living in their own space without shared facilities as most apartment complexes have.
Land Values for Two Family Homes
Homes located in residential areas are also considered to be located in prime regions. These properties tend to increase in value with time. The ability to improve the home and the surrounding landscape is also better than in locations designed as community or commercial land areas. This means as a property owner you can add value to the two-family home you purchase by upgrading the components inside the house or by having the exterior landscaped.
A Better Investment Value for You
As a property investment, the two-family home is better than a multifamily complex because banks charge lower rates. This type of rental is considered the same as a single-family home so the down payment you need is much lower than what it would be for a property in a commercial zone. Not only will your down payment be lower but the overall cost of the home will be lower as well. If you ever do decide to sell, you will find a residential home is much easier to sell than an apartment complex located in a commercial area.
One way you can increase the amount of profit you make is to live in one half of the house and rent out the other half. The maintenance fees, as well as the time involved in yard work and other routine duties, will be significantly lower than if you rented out both sides. The money you obtain from your renter will help defray the cost you pay back to the bank each month. One study of a duplex rental showed the investment gave a return of $300 profit every month, which increased to $550 overtime.
Better Tenant Control
The families who move into your two-family home are more likely to be dependable, responsible tenants. If you choose to live in one half of the unit, you also have the advantage of being on the property so you can keep an eye on what your tenants do. This allows you to have more control over what is allowed and what is not. Of course, if you live on the property you are also more accessible if the tenant has any concerns or if their unit requires maintenance.
There are pros and cons to all types of property investments, but the benefits of purchasing a two-family home seem to outweigh any of the drawbacks. From an investment standpoint, this type of property will provide a better profit margin than some other property investments.
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