Duplex, Condo or Rent?

Question

Hello BP community, looking for advice on this topic!

-  Context: "Girlfriend (23) of 3+ years is moving here in CLT- February 2025. Me (23 years old) been living here for 9 months now. Planning to be living together in CLT for at the least 2+ years, after this- up in the air on staying or moving. Both working okay/fine paying jobs, both worked through school so no student debt, driving old cars so no car payments."

- Situation: I am looking for advice on what is my best route is come February- renting, buying a condo, or buy a duplex (living in one side renting out the other).

- Renting: pro's- not 100% certain CLT is forever, makes easy to relocate. We are young, like being in the city and being close to everything. Con's- feel like I am wasting money. CLT renting prices are expensive, why not pay a little more monthly owning property that will appreciate in value.

- Condo- pro's- own something that will appreciate, can still be in the city, can rent out if we move- passive income. Con's- more expensive monthly, locking us down to CLT/ condo building for what I am guessing at least 5 years to at least make it worth it. not as much revenue/wealth building opportunity as duplex.
- Duplex- pro's- renter's rent money will pay for half of mortgage, after that is paid off, move to a house, have passive income x2, most living space. con's- biggest down payment, outside the city, risk of terrible renter, locking us down for at least 7-10+ years to at least make it worth it.

Overall, I hate wasting money. What I am trying to avoid: renting for 2 years to eventually end up getting a condo/duplex later on or the flip side investing so much into a condo/duplex, and just overall not having it make sense with this situation. I know there are a lot of variables/ "what-if's" but any advice is helpful!

Thank you!

Randall Alan · Answer

@Brian Howse

I would say "Duplex".  Condos put's a layer of management between you and complete control of your property.  Often they have rules on rentals / renters / etc.  They are much like an HOA where they often aren't working towards the same objective you are.

Renting, like you said, is just throwing away your money usually.

I think I would consider the hold-time for your investment.  Know that it will cost you probably $3,000+ just in closing costs to buy whatever you buy (all just dependent on the price and what the fees are for your government and lender.)  For a long-term hold that isn't a big deal.  If you get down to where you are thinking, "We might only own this for 2 years" those expenses don't get divided up by many months and could impact the analysis of what is smarter to do... because you will probably pay double those fees when you sell it.  Hopefully you sell it for a profit, right?  But let's say you have to pay 6% in closing fees to sell on a $200,000 property.  You've now spent $15,000 between buying and selling it just on fees.  Suddenly that is $625 a month extra cost (across a 24 month hold) of saying "I did the smart thing and bought something."  In that scenario renting may have been the better path.

Unless you see a huge upside where you bought it for a steal where a quick sell makes sense 2 years later, I would encourage you to think longer term - even if you move.  So, you buy it, live in it for 2 years, but then turn it into a full time rental where you continue to hold it as an income property.  That way the investment makes financial sense.  Appreciation happens while you aren't looking... suddenly 5-10 years later the property may be worth $50-100,000 more than you paid for it and you will think of yourself as being "so smart" for investing in a piece of property!  You never know about timing.  We bought most of our properties in 2018-2021 and 5 years later most are worth TRIPLE what we paid for them.  It's one of those once in a lifetime type things where the markets just went crazy during the pandemic.  You can't really ever know when that is going to happen, but I would say it's safe to anticipate at least 3-5% appreciation a year over time.

Hope it helps!

Randy