Looking to buy a new rental property? If so, then you may have seen some listings for duplexes and wondered if this could be a smart investment for you. Specifically, a duplex refers to a rental property where a house or building has two units–either side by side or one floor on top of the other.

By understanding the potential pros and cons of investing in a duplex, you can ultimately make the decision that’s right for you.

Advantages of Buying a Duplex

For starters, duplexes offer the potential for larger rental income than a single-family home alone. That’s because you have the ability to rent out to two sets of tenants at once. At the same time, duplexes generally have a great resale value–especially if you put money into the property with smart improvements, such as kitchen and bathroom updates.

For those just starting off in the world of real estate investing, a duplex can also be a wise choice. In fact, some beginning investors even choose to live in one of the duplex units and rent out the other unit, allowing them to stay close by and enjoy easier maintenance.

Drawbacks of Buying a Duplex

Of course, duplexes do come with some potential drawbacks as well. Most notably, a duplex could eliminate some of your potential renters who prefer the privacy of a single-family home. Since duplex units tend to share walls (or floors/ceilings), you may end up dealing with more noise complaints and other civil issues. Furthermore, duplexes are generally not as easy to find as single-family homes or other types of rental properties, so opportunities may be few and far between.

Overall, a duplex can be a sound real estate investment for many. This can be especially true in areas where the demand for this type of housing is high, such as near colleges and universities. Ultimately, it’s important to consider your budget, the area, and your specific needs when deciding which type of rental property is best for you.