Investing in residential real estate covers a broad spectrum of property types. From an apartment building to a downtown condo to a single family home in the suburbs, there is no shortage of choice. Yet one property type that many investors continuously return to is the duplex—two units sharing a investing in duplexessingle wall. What do these investors know and why do they seek them out?

A duplex is most often found in areas where demand for rental property is higher. The location of a collection of duplexes may be found near employment, schools or a shopping district. A duplex will have a list price similar to other price-per-square-foot tallies in most cases yet there are two renters, not one. If the mortgage payments on a duplex is say $2,000 and the rent for each unit is $1,500, there’s an automatic cash flow of $1,000.

A duplex is rarely completely vacant and when one of the units does become so, the other still contributes the income. If a duplex is 100% vacant it’s the fault of the owner, not the rental market. At the same time, a unit in a duplex can also be either a temporary or permanent home for the owner. Real estate investors sometimes buy a unit and live in it while the property is being renovated. With a duplex, that living arrangement can be a permanent one and the owner essentially lives in one side “rent free.”

Duplexes are located in more affordable areas of town and are usually part of a much larger neighborhood with a collection of single family homes, 2-4 units and sometimes apartment buildings will be near the area as well. The cost advantages as well as the low vacancy rates are attractive features for real estate investors. If a duplex isn’t currently in your portfolio run some numbers sometime. You might be pleasantly surprised.