When the time came for me to buy a home, friends and family told me that a duplex would be the best option for me.
The general perception is that buying a duplex will not only provide shelter, but it will also help you ease the burden of paying mortgages because you can live in one unit and rent out the other. That sounds smart, right? Absolutely, there is nothing as exciting as seeing your money work while you sit back.
However, I didn’t opt for the duplex because I prefer privacy and I wasn’t too fond of sharing homes with a complete stranger. My priorities were different back then. Now, I will say that anyone with the right temperament and an entrepreneurial mindset should always opt for the duplex.
Before making the decision whether you should buy Single Family Residence (SFR) or a duplex, here are the pros and cons of owning a duplex.
The pros
- It makes you entitled to larger mortgage because lenders are likely to consider the income from
the rental unit. All you need to do is research the rental rates in your area and since you are
also an occupant, you are eligible to low down payment programs being that you meet the live-in requirements. - The money you get from renting out the other part of the duplex may be enough to cover for
a mortgage which means only little comes out of your pocket. - Equity is built faster because you spend little and have a lot to save which also makes you can save to get
dream house sooner. - In addition to mortgage interest, tax benefits, like writing off utility costs as well as any repairs, could earn you
some exemptions. - If it is permitted by your local regulation, you can also rent out the other half of your duplex to
people during vacations or for studio and other purposes. - Having a duplex and renting out half exposes you to the real estate experience
The Cons
- Not everyone has to be a landlord and remember there are landlord-tenant laws that you need to
abide by. - Repairing all the house units is your responsibility
- There might be a limitation to where you can stay because you will need to look for areas/ places
where you can find duplexes. - Higher property insurance on duplex
- Appreciation for duplex is lower
- You might qualify for low down payments but you might be faced with higher up-front cost.
- Having a duplex space doesn’t guarantee you will have a tenant. Neither does it guarantee you
the rental income.
It’s all in what you want to do. After reading the pros and cons, it is left to you as a rational person to choose between getting a duplex or SFR.
If you have finally decided that the duplex is a must, and then it is advisable you ask yourself these four questions;
- Is the upfront cost of a duplex affordable for me compared to an SFR?
- Can I afford the mortgage if I don’t get a tenant? Can I cover the repairs too?
- Am I prepared mentally, physically and emotionally to become a landlord?
- Am I looking for a home to live in for long or am a looking for stepping stone prior to my dream home?
