One of Chopper and I’s main goal is to invest in real estate as early as we can. We think that if we can live as frugal as possible in are early 20s by the time were 30 we will have a real estate investment. This is a goal for us because we think it’s a vital component to securing our goal of financial freedom. We feel that a good start for us will be splitting a duplex house and having our own tenants.
What is a Duplex House?
A duplex house is a type of investment property that falls under the category of residential real estate investing. This kind of house includes two stories having an apartment on each floor and also side by side apartments on a single lot that shares a common wall. Roughly According to National Multifamily Housing Council, 1 in 5 households live in a duplex building. These homes provide a similar living experience as you would find in a small house. many duplexes may come with a garage to park or an outdoor space and a backyard just like a normal house would. Unlike a house, duplexes may require residents to share common areas with neighbors in there home.
The Advantages of Investing in a Duplex House
Owning a duplex means owning two separate homes on one street, therefore duplexes have high growth and high yields. Another advantage of a duplex is you could live in one unit of the residence and have a tenant next door which could pay off a good percentage of your mortgage each month. Duplex owners who rent out one unit are allowed to take the same deductions as with single-family residences. “Hence, you are still allowed to deduct half of your mortgage interest, half of your property taxes, and half of your mortgage insurance premiums in an owner-occupied duplex,” stated by Mathew Reischer, a real estate attorney in New York City. Another advantage is being close to your own rental property and to the tenant can prove to be a very helpful experience without requiring too much effort due to how close you could be living to the rental property. Your duplex could appreciate in value, and perhaps more than a single-family home. There is no guarantee, but in the long, run real estate values do trend upward. A duplex is more expensive than a comparable house and likely would appreciate more.
The Disadvantages of investing in a Duplex House
There are also several problems to owning a duplex home. One disadvantage would be there could be times that your rental home is empty and will not be bringing you any income. During those times you will need to cover all costs for the home. Another disadvantage to owning a duplex is lack of privacy, sharing a common wall with your tenant could sometimes be a problem. Another disadvantage would be some renters could damage your property so make sure you do a background check and make sure your tenant has good credit and a steady income so you can assure they will give their payments on time.
Investing in a duplex house could be a very profitable investment if done correctly. There are minor issues to owning a duplex. Overpaying for a duplex property might result in a horrible investment with negative cash flow and low rental income. Investing in a duplex is also a great way to get into real estate investing. By weighing the positives, negatives, and making the right choice a duplex real estate investment, in the long run, is a great investment and it is one of my future endeavors to get to financial freedom.