How do you choose between renting out a house and a duplex?

Renting out a duplex has significantly less financial risk than renting out a single-family home, whether the owner lives in one side of the duplex or rents both sides out, according to The Nest. Duplexes potentially have two revenue streams going at once, while single-family homes only have one.

Investors who have enough money to put down and who can qualify for a low interest rate can often live in one side of the duplex and get enough rent from a tenant in the other side to cover a large percentage of their living expenses, notes The Nest. Investing in a single-family home requires the investor to charge enough rent to cover mortgage payments and other costs of the house, including some money to put aside for repairs. A duplex is more likely to subsidize living expenses than a single-family home.

Renting out a single-family home has the risk of losing 100 percent of the income stream if the tenant moves out, explains The Nest. The investor is then left covering the whole cost of the house each month until he finds a new tenant. Also, the value of a duplex is less dependent on real estate values than single-family homes. Investors looking to buy a duplex are more likely to pay on the basis of tenant income rather than local comparable transactions, which means that increasing the rent also increases the value of the duplex.