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Home prices keep going up and they are becoming harder to afford. With new government legislation comes the ability that allows you to add a second unit to your home. Should you consider this strategy in order to make the most of single-family housing? Or are these independent properties better off left alone? While the truth is that the answer comes down to personal preference and independent market conditions, there are certainly some advantages that duplexes provide that cannot be overlooked.
However, before you start building your duplex home plans and investing tons of money, let us set you up with the finances you need in order to make it happen. To learn more about how you can potentially use your property to pay for all of the renovations you are going to make for its conversion, click the link below to book a free strategy call with our team at LendCity.
Single-Family Home vs Duplex Home?
As the name might tell you, a single-family home is one that is made or designed in such a way as to accommodate one family. A duplex home, on the other hand, is a home that, within one building, is designed for two families to reside in. The two sections are usually detached from each other and may require some remodeling and redesigning on your part.
These two units are typically either side by side or one on top of the other, however in some cases property owners will divide the property front and back. Choose whichever duplex home floor plan that suits your property best.
Making payments easier
Converting your home into a duplex home will allow you to go from one unit to two. By choosing to live in one part of the house, and renting the other, you still maintain ownership of the house, but, you will be getting rental income from your tenants, and it will be easier for you to pay the mortgage. For example, if your monthly mortgage payment is 1500 dollars, you convert your home into a duplex home and rent out the other portion for 800 dollars, then all you need to come up with is 700 dollars for your monthly mortgage payment.
This strategy is also known as house hacking and is incredibly beneficial for investors who want to use their current home to begin saving up for the next one.
Alternatively, the lower rents across both units means that your units will be more appealing and affordable to renters thus making your rental income more consistent on average.
A good starter home
From the perspective of a family person, if you have children, turning your home into a duplex home is a great idea! Once your children grow up, they might be looking for some independence of their own. In such a situation you can easily rent the other, attached or detached part of your house to them. Not only will this be a good starter home for your kids, but it will also help you keep an eye on them. Also, if you have elderly family members, you can rent out half your house to them and keep an eye on them and be there for their support.
Discover How To Analyze a Properties Cash Flow With This Step By Step Guide
Legal Two Units
Once you legally convert your home into a duplex home, you will have two units instead of one. Depending on the area that you live in, this could significantly add to the real estate value of your house as well. If you decide to sell your home, you should be able to sell it at a higher price if it’s a legal duplex home, which is an excellent way to make money!
You can still convert to two units and have it not be legal, but you must speak with your local municipality to ensure there are no issues with this. If the unit is not legal, you cannot sell it as a two-unit property, therefor demanding a lower sales price.
Make More Money
To make money from your home, converting it into a duplex home may be a great solution. Some properties need very little cash to separate the units, while others may need a complete renovation. Depending on the intensity of the conversion this process may or may not make sense. However, if the financials are there, then a duplex home commands more rent than a single-family home which will provide you with stronger cash flow and a legal duplex home will always sell more than a two-unit non-conforming property.
Sometimes, by offering two units after you move out you can begin to generate greater cash flow than the property would have ever had as a single rental. Let’s say a property could have gone for $2300 on the rental market as a single-family home, if you split it into two $1300 units, you would be able to earn up to $300 more in monthly cash flow off of the same property.
Look at the image below to see a breakdown for what you could expect cashflow to look like on a property that has both units rented for a total of $2600.
So, if you are ready to invest in a duplex today, we are ready to help you. All you need to do is click the link below to book a free strategy call with our team at LendCity and we will begin the process of connecting you with the best financing options for your renovations today.