by Larry Alton
When most people think about buying their first home, a nice little brick house with a white picket fence comes to mind. And while there’s nothing wrong with this, maybe you should actually be thinking about a duplex.
3 Reasons to Consider a Duplex
If you’ve never thought about owning a duplex, then you’re probably unaware of just how many exist in your market. Duplexes are everywhere, and they can be extremely wise investments in certain situations.
While you probably don’t want to buy a duplex if you have a family with kids, it’s perfect for someone who is young and single (or newly married). Here are a few of the benefits you’ll get to enjoy.
1. Mortgage Benefits
Before you can even consider buying a duplex, you have to get your financing squared away. As On Q Financial explains, “The pre-qualification process is the best way to determine the numbers that are right for you. Early in your search, you can work with a mortgage professional to get prequalified and search for homes within your wants, needs, and budget.”
What you’ll find is that a duplex may actually help your mortgage situation, if you plan on renting out the other half. For example, let’s say the mortgage on a duplex is $1800 per month, but you can rent out one half for $1,000. You’re essentially getting 55 percent of your mortgage covered. Not only does this save you money, but it could also help you build equity much quicker (if you choose to make larger payments).
2. Tax Benefits
As you’re likely aware, you can deduct the interest on your mortgage come tax season. And while you can only write off the side you live on (in a duplex), you can gain access to additional write-offs by renting out the other half. This includes fees accrued to rent the place, as well as things like repairs, maintenance, and utility bills (if you share in them).
3. Ability to Learn a New Trade
Another added benefit is that you get to learn the ins and outs of the landlording business firsthand. This will either show you, at an early age, that it’s something you’re not interested, or it’ll give you the experience and confidence needed to launch a career in real estate investing.
Acknowledging the Downsides
Duplexes aren’t perfect. In full disclosure, there are some potential disadvantages that you need to be prepared for if you plan on investing in one. The two biggest are:
1. Lack of Privacy
For some people, the lack of privacy that comes with living in a duplex that you own is just too much. Not only do you have someone living just a few inches away from you at all times, but there’s also the risk of late-night knocks on the door. If the air goes out or a toilet gets stopped up, there’s not hiding. You’re on call 24/7.
2. The Unknown
Finally, there’s the unknown. In a duplex, there are two of everything—including toilets, appliances, and fixtures. This means there’s twice the likelihood that something will break down and you’ll have to fix it (cha-ching!). There’s also the risk that the other half will sit vacant for a period of time, resulting in no rental income. Keep this in mind as you weigh the pros and cons.
Give Yourself a Financial Headstart
When it comes to buying your first house, perspective is key. You have to realize that you aren’t going to be in this house forever. In fact, most people stay in their “starter” homes for less than five years. Think about the pros and cons, weigh them against each other, and determine whether or not a duplex will work in your situation. For most young homebuyers, it turns out to be a smart decision.
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This information is intended only for the use of the intended recipient(s) and it may be privileged and confidential. Please note that any views or opinions presented in this post are solely those of the author and do not necessarily represent those of the company. This is reposted information and is not original thought of Ireland Investments or anyone associated with the business.
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