5 Cities Where Buying a Duplex Could Cover Your Mortgage

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Buying a duplex, meaning a two-unit home, has the potential to be a lucrative real estate investment. In the right market, you can buy the duplex, live in one unit, and rent out the other, using that rent money to cover the whole mortgage.

If all goes well, you can essentially get free housing for yourself while potentially earning an investment return from any rent that exceeds the mortgage costs as well as gains in the underlying value of the properties.

That’s not to say that profiting from a duplex is easy, but in areas with relatively low buying costs yet comparatively high rent, the math can work out to your advantage.

“Even if the rent from the second unit does not cover the monthly mortgage payment, the rent from the additional unit will often make it more affordable for a person living in the property,” said Marcia Kaufman, CEO at Bayport Funding, which provides financing to real estate investors.

While sometimes this dynamic occurs in metro areas with a very low cost of living, that can also coincide with low rent demand and prices, making it difficult to recoup mortgage costs from renters. Some lower-cost locales do have strong enough rental markets for this to work, but sometimes buying in a higher-cost metro also works out, due to even higher rent prices.

In Kaufman’s perspective, being based in Long Island, New York, she sees several areas within the Greater New York City region that fit this mold, as well as some cities in the South. Specifically, there are five cities where Kaufman thinks buying a duplex could cover your mortgage.

Yonkers, New York

Yonkers is a city in Westchester County, located very close to New York City. However, housing sale prices are nearly half as much on average in Yonkers than in New York City, according to Redfin data. Meanwhile, rent is still strong in Yonkers — not quite as pricey as New York, but often providing a better yield relative to the sale price, which can make buying a duplex worth it.

Hoboken and Jersey City, New Jersey

Another part of the New York area, just across the Hudson River, that could be a good spot for duplex investors is Hoboken and Jersey City, New Jersey. These are two separate cities but are direct neighbors and often grouped together for these types of discussions.

Here, housing prices can rival New York City overall, though they’re still much less than Manhattan. Yet both Hoboken and Jersey City offer fast, easy train access into Manhattan, making them great commuter cities for young professionals. Thus, these cities support very high rents — sometimes even exceeding parts of Brooklyn, though much depends on the specific neighborhoods and units.

Jacksonville, Florida

Jacksonville is a growing city that recently crossed the mark of having 1 million residents, making it the 10th largest city in the U.S., according to U.S. Census Bureau data. Despite the influx, Jacksonville remains relatively affordable, with a median home sale price that’s 32% below the national average, according to Redfin.

Yet the average rent in Jacksonville is only 20% below the national average, according to Apartments.com. So, that could be a gap some duplex investors exploit. Plus, if the city keeps growing, rent could rise too, so locking in a relatively low purchase price now can pay off.

One thing to note in Jacksonville, however, is that you “need to be careful of insurance costs cutting into rental income and ensure that the renters get and maintain renters insurance,” said Kaufman.

Raleigh and Durham, North Carolina

The Raleigh-Durham area — two cities often grouped together for market considerations — provides another intriguing opportunity for duplex investors.

Housing prices are close to the national average in Raleigh and Durham, although rent prices tend to be a bit below the national average. This may seem like a negative to duplex investors, and in some markets it is. However, the strong economy in this region and fast-growing population potentially present opportunities for duplex investors to buy before prices rise, similar to Jacksonville.

In Raleigh and Durham, said Kaufman, the strong university population supports healthy demand for potential renters. Many students then get jobs in this region’s innovative economy, stemming from its strong educational base. So, that supports strong rental demand from young professionals who aren’t ready to buy but have the ability to afford nice rentals. 

Indeed, Kaufman noted that potential duplex investors should consider job prospects, especially for new job hunters, to get a sense of whether buying might be worth it in any market. The stronger the demand, the more security and fewer costs associated with things like vacancies between tenants. 

Long Beach, New York

Lastly, this small city on Long Island does have high purchase prices like much of the New York metro area, but being a beach town can make duplexes here particularly lucrative.

Some investors may find they can cover their mortgage costs by utilizing one unit as an Airbnb or short-term rental during the warmer months of the year, said Kaufman. 

Yet even in the off-season, Long Beach can still support rental demand, given that it’s within commuting distance of Manhattan and has a direct train line there.

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