Posted over 2 years ago Duplex - The Dynamic Real Estate Investing Stepping Stone A while back I wrote an article on our website’s real estate blog; "Aging parents and the beauty of a duplex." A duplex is my hands-down favorite investment property for a variety of reasons.Real Estate Investing - The DuplexA duplex was my very first investment property. I had bought one for a primary residence, thinking I’d rent the other side out to cover the mortgage. Hey, build equity and not have to make payments. Sounds good! A couple years later though, I moved my elderly father in. Eh, I charge him a very low rent, but it still covers a lot of the mortgage payment.Enough that I can easily add extra principal payments to build equity faster and reduce debt quickly. One thing I’d point out to real estate investors just starting out, owning a duplex is a great way to help free yourself up financially.If one side of a duplex is making your mortgage here in Monroe, Ohio (a Cincinnati suburb) for example, I’m not paying $900 to a $1,400 for rent. That’s $10,800 or more staying in my pocket. That’s a down payment once a year on another investment property. You can use mortgage debt to leverage your way up, but you need to keep positive cash flow of at least $300 a month. Now, these figures and suggestions could differ greatly in other areas. You get the idea though.In addition to a positive cash flow, you need a set amount deposited into an account reserved just for property repairs and upgrades as needed. A roof for instance, around here a roof on a 1,500-square-foot home will run about $6,000 t0 $8,000. Installing new roofing every 12 years at those numbers would be about $45 - $55 bucks a month. A roof is likely the most expensive item for maintenance and updating. I suggest $150 per month for a property costing / valued at about $150,000 around here.More money down means less mortgage to carry, better cash flow and property repair reserve funds. One thing I hate to see are property investors that allow their rental income properties to become distressed. It’s a backward way of dealing with things to me. You can’t increase the rent on a dilapidated house. A distressed rental property holds the neighborhoods rental income down. It attracts the worst type of tenants that can’t rent elsewhere.What's the Rate of Return on a Duplex?There are a lot of ways that investors factor their ROI, or rate of return. Big complicated calculations in software programs specifically designed to calculate finances on income properties to pen and paper methods. My advice is, be thorough. A duplex’s ROI isn’t too difficult for a new property investor. I also suggest you do your homework on tenant-landlord laws and acquire property management tools and skills. Factor everything, who pays utilities, lawn care, etc.Another beautiful side of a duplex, no pun intended, as one side or the other becomes vacant you can update, renovate and raise the rent to the going rate in the property’s area.Where to Find a Duplex to Invest In:Here’s a tip on where to find likely, income producing duplexes in your real estate market. Colleges. A lot of students don’t want to be in a frat house, some students are going to other kinds of universities and technical schools. As most students must work their way through college, they are most likely to look for housing near both school and work.There’s an interesting debate brewing about whether colleges should provide affordable housing for students. Somehow, I don’t think that’s going to happen. At least not anytime soon. Check out this article from Monmouth University’s The Outlook – The Dorm Debate, you’ll see what I mean.