As a “Buy and Hold” investor in the Indianapolis real estate market, should you buy a duplex or a single family home?

Whether you are doing Fix-n-Flip or Buy-n-Hold you need to know what kinds of properties will fit your criteria best so today we will talk about how to decide between a duplex or a single family home.  Many investors have made good ROI with both, but you’ll make the best decision for YOU when take these factors into account.

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Now for today’s class on picking between duplexes and SFR…

Duplex versus single family residential comparison for Indy buy and hold investors

Is it better to buy a duplex or a SFR (single family residential) for buy and hold investing in the Indy real estate market?

Indy Anna explains:

– The Indiana price point difference between duplexes and SFR

– Potential monthly rental incomes for both

– Examples of both that are LIVE deals

You can download the helpful guide above in a .pdf by clicking HERE.

If you are investing in the Indianapolis real estate market as a buy and hold investor, is it better to buy a single family residential or a duplex?  This question has come up a few times but not as much as it should when I’m working with out of state investors.  So today I’m making this quick video to answer the question.  I understand where our out of state, or our out of country, investors are coming from with their thinking so today I’ll break down the differences and help you decide on SFR (single family residential) or duplexes for long term, buy and hold investing.

What about the cost difference between duplex and single family?

A duplex will cost more money than a SFR property, and that is true in most markets.  It doesn’t always apply to the Indy real estate market though, here there are many price points where a duplex will cost more than an SFR but there are also some price points where it will not.  Here’s an example:

So you could buy a SFR in Indy for around $100,000.  Maybe you buy it and it is rent ready or you bought it at a lower price and you did the rehab to make it rent ready and your all in cost was $100,000.  This would’ve most likely been cosmetic or light rehab work.  Either way you can get a rent-ready property at a total cost of $100,000 and have it rent for 1% a month, or $1,000 a month.  For more on 1% properties see my other classes on this.

If you have $100,000 and want more cash flow?

Now let’s say you want more cash flow but you don’t have much more than $100,000 to work with.  If you had $200,000 for example you could just buy two of those 1% houses and after investing $200,000 you would be getting $2,000 a month in rent.  For our example we will say that you have more than $100,000 to invest but not quite $200,000.

There is what we call the “Duplex Sweet Spot”.

You could buy a duplex between $100,000 – $200,000 and have it rent for more than 1%.  The duplex may produce 1.5 – 2% in monthly rent yield.

But don’t duplexes have lower quality of renters and tenants?

One common concern is the quality of renters that you get with duplexes.  This is usually a spillover concern that investors have from other markets where duplexes are only found in Class D or worse areas.  While Indy does have some Class D duplex properties, this isn’t the only location of our duplex deals.  In Indy we have good duplex deals in GOOD areas.  For more on the Indy market breakdown you can check out my class below and also the my class on the Class A through Class D areas in Indy.

The Indy market has duplexes all over the place, near universities or downtown Indy or in Class C areas and even sometimes in Class B areas.

Here are some good examples of real life deals on duplexes and SFR:

So here’s a property for sale for $80,000, it is rent ready and it rents for $850.  So even after you closing costs and everything else this would easily be a 1% property.  This property is in a Class C area.

So let’s say that you and I working together (to apply you can go to the Investor Profile page) and you tell that you want a higher return.  You could buy two properties like that and invest $160,000 and make $1,600 a month, but let’s say that you want more than just 1% and you don’t have a full $160,000 to invest.

The Indy market has 2% houses

Also a quick note about the Indy market, this is one of the only markets in America with “2% houses” or houses that rent for 2% of the value.  So a $40,000 SFR that rents for $800/mo would be an example.  Usually the limit for 2% houses will be about $40-50k.  With the 1% houses, or SFR that rent for 1% of the value, normally the maximum value is about $120-130k or 150k max usually.

So this usually means that a duplex is one of the only ways to get above 1% rent on 150k+ value property.

Example Two:

So this other property is a duplex in a Class C area and the price is $135,000 with each side renting for $1,150 a month.  That is a monthly yield of 1.7%, much better than the 1% on the SFR.  You see how that solves a problem?

What about Property Management on duplexes versus SFR?

Sometimes investors are concerned about the property management costs that will be added if they have another “door” to manage.  By the way make sure to go through my class on how to find great property management for your Indy deals.  First of all there are some property management companies that will not manage deals that are under $850 a month, so that is something you should know.

There are other companies that will manage each door for $50 a month, a reasonable cost you can expect would be $100 per door or anywhere from 5-10% depending on a few factors.  Also remember to check out our list of Indy real estate professionals (including property managers) at: https://www.bigreia.com.

What about meters and utilities?

Most of the duplex properties in Indy are set up for dual occupancy on one parcel, so they are usually zoned correctly and favorably for landlords and investors.  This means the duplex will usually have separate meters on both sides as well.  So most duplexes in Indy will already have the utilities separated for each unit.

What about having the tenants pay for utilities?

Another common question that investors have about both SFR and duplexes in Indy is about the utilities and who pays for them.  This is one reason that investors can be hesitant to get into a duplex, but that fear is usually another spillover worry from other markets and other legislation.

Here in Indy the tenant can pay for all of the utilities, including the water. This is not the case in each state, and definitely not the case worldwide in other countries, but here in Indy it is totally normal for a tenant to pay for the utilities so this won’t be an issue.

What about TAXES?

So both a SFR and a duplex will be considered dwellings, but the duplex is two units and usually on just one tax parcel.  When it comes to taxes, you have the Indiana property tax cap of 2% as an out of state investor.  Also I made a class about paying taxes on Indy real estate as an out of state investor so you can check that out as well.  The duplex property will likely have a higher property tax assessment as the value of the structure is more, so in the examples I gave you above here is the difference:

On the SFR the semi-annual property taxes are $600, for an out of state investor the next year’s taxes would be around $1,200.

For the duplex property, the semi-annual taxes are $850 a year, next year for an out of state investor you would be paying around $1,700 a year.

So in summary:

I’ve gone over a typical price point difference between a duplex and SFR here in Indy

I’ve gone over potential rental incomes for both types of properties

AND I’ve given you examples of both with current listings from the MLS

Free Download:

You can download the helpful guide above in a .pdf by clicking HERE.

Remember to…

Make the Universe Smile.

Thanks so much!  = )

~ Indy Anna

Want more (brilliantly) EPIC posts of real estate investing and bidness badasssery...?

There is a great post and class on the 38 Ways to Buy Apartment Buildings Zero Down with Pet Policies, and here are some other helpful and EPIC posts... for starters as a real estate investor if you ever want to build a business that makes you 30 grand a month then you MUST do this...

There's also a great class Azam did on how anybody can retire in the next 1-2 years with $30,000 a month in passive income by buying and selling businesses zero down.  What about Micro Flipping?  We have a great class on how to start micro-flipping real estate zero down from your house and make $500/day, speed wholesaling 101.

There’s also another great class on how to buy apartment buildings zero down that you can check out as well.  This relates directly to growing income on rental properties.  Speaking of which make sure to check out our epic page on 14 ways to avoid tenants from hell.  Also we have a great post on how to make build a "six figure a month" real estate wholesaling business.

Also here is a post on how I did this and I flipped a house off Zillow for 30.  Also you can check out the post on five steps to flip a house right off Zillow for 40 grand.  You can also check out our other epic post on 57 ways to make money with vacant land.

Here’s another post on how a Hero flipped a house off Zillow and made 40k in a few weeks while he was learning to read.  Also you want to check our post on the EPIC $25 million letter and the copy writing lessons for real estate investors, you'll love it.  Also you can see how ONE letter is making me $9,000 a month.  Also you can check out the post on 101 FREE places to advertise your houses.

Also check out the "SA" class and your REAL chances of create social mobility and income ascension with your real estate business.  Brilliant stuff.  Also there is a great post on the ONLY way you'll ever make 30 grand a month as a real estate investor and/or business builder.  Another brilliant class with a free downloadable Investor Guide is about 19 Ways to Make $10,000 a Month by Helping Tired Landlords.

Plus make sure you check out Azam's post on how to hire a realtor that makes you $10,000 a month... while you sit back with your shoes kicked up on your desk and fingers folded behind your head.  Also there is a great post on how to make five grand a week from putting out signs.

Also we have some great posts on 30 ways to buy real estate with no money down.  That is a two part series so make sure to watch the second part on the 30 ways to buy real estate zero down and with no loans or credit.  I also get questions about our "Epic Flipping" and how to turn $1 into over $25,000 by flipping ordinary items for exponentially high ROI.

And don’t forget our EPIC page on 100 FREE ways to find motivated sellers, we are making the number one page in the world on FREE ways of finding motivated sellers.  Also check out how I find motivated sellers from code violation properties, and also how I make over $1,500 a week giving investors access to that list.  Speaking of lists, for a list of the "Good People" and My Indy Anna Homeys you can go to our People Page at https://www.BigReia.com/people.

You can also get a LONG list of every contract, piece of paperwork and legal document that you'll EVER need for your real estate business all FREE to download: https://www.BigReia.com/Contracts.

Also perhaps the most important class Azam has done is on the "Frequency of Thought" and how to use the laws of quantum physics to rewire your brain, attract brilliance like a lightning rod and be the best version of yourself.  Check out this epic 3-hour class on Quantum Real Estate.

Go to BigReia.com and you’ll become allergic to being an LC and addicted to improving the world and creating Social Mobility for you and yours… 

Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
317-969-5619 (YES that's my actual Direct Line and I really do answer lol, so please text me first Thx!)

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