31 May 2021

It seems that over the past couple months, more and more duplexes have been coming on the market.  This is likely due to investors selling their duplexes to capitalize on the current market and cash out while the market is high.  Because most of these investors already own and live in a separate home, they won’t need to worry about the buying process, so this makes sense.  

This selling trend is putting more inventory on the market, and creating an opportunity for buyers to enter the housing market who have been previously priced out of the market, or constantly outbid.  Buying a duplex is a great way to get started in real estate and avoid the bidding wars of the single-family home market, while lowering housing costs by renting out the other dwelling.  The extra unit in a duplex can fetch as much as $2,200/month to put towards housing costs, and help when qualifying for a mortgage.  I’m also starting to see more buyers pooling together resources with family/friends and looking to buy a duplex instead of renting or buying a condo. 

Duplex listings are not seeing the amount of competition that single family detached homes are receiving. I have bid on several duplexes for clients recently and the total number of offers range from 2-4, as low as 1 in some cases.  This is a lot more reasonable than the crazy bidding wars we’ve seen with single detached homes or even condos.  So, the chances of an offer winning on a duplex is much higher than with a single detached home, with a final selling price much closer to asking.  Selling prices for duplexes are not far off from single family detached prices, as a decent duplex can cost between $700, 000 to $900,000, depending on the quality and location.  This works out to roughly 350k to 450k per unit, which is cheaper than a 1-bedroom condo!  And similar to a single-family home, you would own the building and a piece of land, something that is getting further and further out of reach for most people.

Duplexes will typically offer the same amenities as a single-family home, such as a fenced in lot, yard space, control over repairs and maintenance and outdoor spaces.  There are also different styles of duplexes such as side-by-side, which resemble a pair of semi-detached homes. There are also multilevel up and down duplexes, which include a main floor and finished basement as one unit, and second level + loft as the 2nd unit.  Duplexes would typically have 2-3 bedrooms per unit.

Buying a duplex is a great way to qualify for a larger mortgage.  Lenders will typically apply anywhere from 50%-75% of rental income from the extra unit towards qualification of the mortgage.  For example, if the extra unit can be rented for $2,200 + utilities, this means that approximately $1,100-$1,650 can be counted as income towards mortgage qualification.  Lenders typically require a minimum of 20% down payment to consider rental income on the application, however it may be possible to put down less than 20% with a default insured mortgage.   Additionally, most lenders will require the extra unit to be a “legal separate unit” meaning it must have a separate entrance, kitchen, bathroom and bedroom in order to accept the rental income towards the application.  When applying for a mortgage, it’s best to speak with a licensed mortgage agent or broker for the most accurate advice.  

I have personally been a multi-unit owner for many years which allowed me to become a homeowner at a young age and earn a higher rate of return on my investment while building equity over the years.   So, if you’re looking to enter the housing market, but have been priced out or outbid too many times, then buying a duplex may be the right choice for you.