Buying a duplex can be rewarding. Most people decide to purchase a duplex to reap the benefits of being a landlord: specifically, collecting rental income. Earning extra money is a definite plus but you should determine whether you can handle the risk and responsibility of buying and renting a duplex before you go to closing.
Where you live plays a role.
Some people buy a multi-family home like a duplex with the intention of moving into one unit while renting out the rest. Others plan to stay in their current home and rent out the other property entirely. Both situtions can provide a successful return on investment if handled properly, but they can also lose money as well as peace of mind.
Is living with tenants worth the rental income? Could you handle being in such close proximity with people you don't know or would it get to you after a while?
If you’re going to remain at your own home and not move into the new place, be sure to evaluate how long it takes to drive to the rental property. Once you become the landlord, you're responsible for what happens there. You won't want to drive more than an hour every time your tenants call you about a leaky roof or pest problem, especially if it's three in the morning.
Location is everything.
The better the location, the higher the average rent rates. Find out what areas are renter hotspots. For millennial renters, who make up a major portion of the renting population, it means living in a major metropolis.
Whether you’re planning to rent one unit or both, ask your realtor and other landlords in the area about rental rates in the community where you are considering buying the duplex. You want to make sure your rental income will do more than cover the cost of property maintenance. Otherwise, it's not worth investing your time and money.
Owning a duplex can be a great investment if you can handle the upkeep and keep peace with the tenants. But some people may conclude that the benefits don’t outweigh the drawbacks. As long as you carefully consider your options, you’ll know if a buying duplex is right for you. If you're unsure, we're here to help you figure it out.
Learn more about Contour Mortgage’s multi-family mortgage loans.
