"Mortgages can be fun!"
(said no one ever)
Home ownership is a big decision and for some situations, buying a duplex and living in one side may be an excellent path to reaching your financial and lifestyle goals. Read on to understand the pros and cons:
Rental Income Can Help Cover Monthly Costs. If the mortgage payment from that dream single family home exceeds your monthly budget, the rental income from a duplex can bring you back within your ideal range. Not to mention, the expected rental income may allow you to qualify for a larger purchase price. We are happy to help break this down for you.
Building Equity. Duplexes are great for building equity especially since the rental income is helping offset that mortgage payment. That equity can position you to make the leap into a single family home later OR even purchase more properties purely for investment.
Real Estate Investing. The owner occupied duplex investment strategy is a gateway to building a larger real estate portfolio. That’s because, purchasing a duplex is not only a good way to gain experience, but it also tests if you’ve got what it takes to manage more property investments.
Are You Landlord Material? Never mind how glamorous landlords appear in the movies ;), it can be tough. Not only do you have to be available day or night, you’re also responsible for repairs AND and you’re going to have to get versed in all the legal aspects of having tenants.
Purchasing/Selling A Duplex Can Take More Time. Location options may be limited as not all neighborhoods offer a mix of single family, duplex and multi-family units for sale. AND, when it is time to sell, it could take a little longer to find a buyer looking specifically for a duplex.
Higher Costs. Generally duplexes are more expensive than single family homes so in most cases, you’ll need to fork over a larger down payment. And while that rental income is going to help offset some of the mortgage payment, if the unit becomes vacant at any point, your finances could take a hit. Lastly, property insurance runs higher on duplexes.
Unfortunately this decision depends on many variables, but ask yourself this:
Can I afford the higher upfront cost of a duplex? Consult a mortgage broker about this if you’re not sure (ahem!).
If the unit becomes vacant, can I cover the property expenses? If so, ask yourself for how long.
Can I handle the commitments and responsibilities of being a landlord?
Do the neighborhoods with available duplexes meet my location requirements?
Will my lifestyle fit into a single unit within a duplex? Families with kids pay close attention here.
If you answered “YES” to all of these, then you should seriously consider a duplex. If you need to talk to a professional, we’re here for you too.
PS Check out our simple eval process where you can choose whether you want to: get real rates specific for your scenario (beware of teaser rates!), see how much home you can afford, get pre-approved, or quickly submit your contact info so we can get back in touch.