Investing in real estate is one of the best ways to build wealth. It's an asset that appreciates over time — in some cases, all while providing you a steady cash flow in the form of rent.

As good as it is, real estate is also an asset that's out of reach for many people. After all, it isn't cheap. Right now, the median sale price for homes is higher than its been in the last 10 years.

There are investment strategies that you can use to secure your own piece of property. You can invest in a duplex, or multi-family home, that will serve as both your residence and as a property that you can rent out to others. It's a strategy that's worked for many — but if you want it to work for you, there are some things that you'll need to keep in mind.

Benefits (and Risks) of Investing in Duplex Property

The main benefit of investing in a duplex is in the value of the property and the passive income it will provide you. Compared to a non-duplex property, you'll get some help with your mortgage. Normally, you'd be totally on the hook for the cost of taxes, upkeep and monthly mortagage payments. With a duplex, you'll have some help in the form of rent.

While there are no guarantees in life, a tight housing market means that you'll have an easier time finding prospective tenants who can afford rent in line with the value of your duplex and local property values. This is especially true if you plan on purchasing a duplex in a lower-income area, as nearly the entire country is facing an affordable housing shortage.

Keep in mind, however, that receiving income in the form of rent will make your taxes a little more complex. If you haven't already, you may need to enlist the help of an accountant or tax professional that can help you keep your finances straight — and maybe help you benefit from some extra deductibles.

The risks of a duplex are similar to most other rental properties. You aren't guaranteed rent, and will need to properly vet tenants. Even the most reliable tenant can be struck by unfortunate life circumstances which renders them unable to pay rent. While an empty room won't cost you extra, you may have difficulties if you rely on that payment to make your mortgage each month. You'll also have to live with your tenants, which can be a daunting prospect for some homeowners.

Lastly, you will be responsible for all upkeep, unlike if you were renting. But if you were already planning on purchasing a home, you were probably expecting that kind of responsibility.

Duplex Investment Strategies

If you'd rather build your own home — or own undeveloped land that's zoned for residential development — you can also simply build your own duplex. This process will be more involved than just purchasing an existing duplex, but you will give you much more control over what the final house will look like. While most duplexes are built with both sides as mirror images, exploring alternate plans with a builder can help you customize your property for your family's needs.

No matter which method you use, you'll likely need to finance your purchase. When discussing the loan with your bank or credit union, you can use the possibility of rent to get help you secure a mortgage. Your loan office may be more comfortable with your ability to pay for the mortgage if they know that you plan on renting out some of the rooms in the duplex. Typically, up to 75 percent of the fair market rent you expect to make can be used to help you qualify for a loan.

Even with the possibility of rent-paying tenants, you'll still need a good credit score and should expect to pay a large down payment. If you're holding on to a high level of debt, it may prevent you from receiving financing.

Investing in a Duplex Property

Investing in duplex does carry some risks — but the benefits that you can earn are significant.

If you're already planning on a buying a home, upgrading to a duplex can be a way to both invest in your own housing and make some money to help you pay for your mortgage and the duplex's upkeep. And if buying a duplex outright doesn't appeal to you, there are other strategies, including building your own duplex, that you can follow.