Advice on 2nd duplex purchase.
Hello everyone. I'm going to keep this as short as I can but 20 years old now I bought my first duplex in November for 276k 13k down or so, 5% with interest rate of 6.125%. Currently owner occupying it until my one year term is up so that I can pull a loan. I have already got a renter very interested and is happy to wait until November to move in our current unit. I did do a good amount of renovations here like a full new bathroom and square footage add, also added cabinets, dishwasher, garbage disposal, tile backsplash, a lot of things to make it look real nice and functional. I have to talk to my same lender yet to see if we can pull something together before the one year is up. But I'm not sure if I should cash out refinance to get the funds for next deal or just use my capital ($30k). Or a mix of both. I don't think I don't really have any equity to borrow yet so I don't think that would be a great idea. The property I'm looking at buying next is my dream duplex pretty much. I have to go look at it on Monday. But I told the realtor I'd be happy to do dual agency with her (I think that's what it's called when you use the listing realtor for the buyer aswell). And the situation seems to be working out well. She said her buyers would have no problem waiting until November as long as they got some earnest money. The listed price is $320k. And the one unit is vacant. So this is the perfect situation. My only fear is over leveraging myself as I've been told I will do by many Reddit keyboard warriors. I do have another $10k as an emergency fund along with a $24k annuity with my union but I don't want to pull from that. I'd love to hear some advice from some of you experienced investors. I appreciate every little bit I can learn. Thank you all. I probably left a lot out so ask whatever questions you have to give me the best advice.
Most Popular Reply
First off, congratulations on getting your first duplex at 20 and improving the property before renting out the second unit. That's a strong start.
The biggest thing I'd think about isn't whether you can buy the next duplex, but whether you'll still be comfortable if you have a vacancy or an unexpected repair at one or both properties. A lot of investors focus on getting into the next deal and underestimate how much flexibility strong cash reserves provide.
I'd also compare the long-term cost of using your own capital versus a cash-out refinance rather than assuming one is automatically better. Sometimes preserving liquidity is worth paying a little more, and other times keeping your monthly payment lower makes more sense. It really comes down to your overall cash flow and risk tolerance.
Did your lender give you an estimate of what the duplex might appraise for after the renovations, or are you still waiting to have that conversation?