Should I buy a Duplex or single family house - There are positives and negatives to owning a duplex over a single family residence. A duplex allows you to rent out one side helping to reduce the financial burden your mortgage payment puts on you.

When qualifying for a mortgage in a Duplex, you can try and qualify as an owner occupied property if you will be living in one of the units. This may get you a loan with a lower interest rate as well as reduce the amount of down payment if any that may be required.

While buying a duplex may make more sense with the thought that you can rent 1 unit and live in the other unit you must remember that you will need to keep it rented, to a responsible renter, to gain a benefit over a single family home. This can sometimes prove to be a tough task; that is, getting a renter in there that pays the rent on time and keeps the unit clean and in good condition. You will also be responsible for maintenance of the unit you are not living in (along with the unit you do live in too). There will be items that will need to be fixed and possibly replaced, every time a renter leaves you will most likely have to go in and clean the carpets, possibly apply a fresh coat of paint, fix anything broken, etc... So therefore, just keep in mind that many more responsibilities come up with a duplex as opposed to a single family house.

If you decide to rent out one side and live in the other you will benefit from being an onsite landlord. You have an extremely lower probability of your tenants damaging your property when you are there.

Owning a duplex has several tax shelter opportunities. Some of these include being able to depreciate one-half of the duplex, and deducting the interest on the mortgage for both sides of the duplex.

Before purchasing a duplex, be sure to consider the resale potential of the property. Traditionally it has been more difficult to sell a duplex than a single family residence.

Duplex Financing - Financing for a 2 family home. Typically these properties are zoned as R-2 and are attached.

If you are buying a Duplex as a primary residence, you can use the income from the other unit towards your debt to income ratios.

Duplex financing can be similar or same as SFR in programs and rate availability.

Rental Property - Many people dabble into real estate investing, or at some time or another think about purchasing rental properties. There are many things that need to be considered when looking to buy rental properties. One thing you should know is that qualifying for investment property financing is usually a little tougher than qualifying for the property that you plan to live in.

You will also want to develop a business plan for an investment purchase to make sure that you do not get in trouble financially. You need to budget any profit you make from that property for repairs and routine maintanence. Many a real estate investors fail due to lack of planning.

When qualifying for a rental property mortgage loan you normally will not be able to use 100% of the rent that you collect. For qualification purposes, most lenders only credit 75% of the rent collected. This is to allow for vacancies that will occur in the rental property.

It will be important to consult with your accountant professional to review any tax benefits that come with a rental property. Possible tax advantages can possibly include, improvements, repairs and even vacancy.

If you already have rental proptery a lender may ask to see copies of the rental agreemtents you already have.

Make sure you keep track of all your rental agreements along with the ability to track payments for proper record keeping. Make sure to get checks and not accept cash when collecting monthly rent.

When planning to purchase a rental property, you should prepare to have around a 10% down payment. Though there are a few no money down loan programs for investors, you will get much better terms if you are working with a down payment.

Many people invest in rental property to create an income to supplement other retirement income, or even as a main source of retirement income.

When deciding on investing in a rental the risk is high. A few basic questions need to be answered before making the purchase. How long can you afford for my tenants to stop paying rent? I suggest a minimum of 4 months reserves. Are you familiar with your states eviction laws? Do you have an attorney? Unfortunately these are just a few of the issues you should be familiar with.

Rentals can be a great form of cashflow. It just takes a little bit more work!

 

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