Purchasing both sides in a split duplex?

Question

Hello, I have read and heard... buy a duplex and live for free! I have found a duplex in the Indianapolis area that would be suitable for my family to live in one side and to rent the other side. The problem is at some point the duplex was split and is separately owned. Both side want to sell, but I don't want to own two entities I want to own one property with one mortgage and one tax identity! Does anyone have experience with this problem and is it possible to bring the two sides back together into one recognized property! Thanks!

- Justin

Justin Schellenberg · Answer

@ David R.

I have not done any research on what it would take to change a title on a property... If I find something I will post it or if I go through the process I will try to post key steps along the way!  If something does happen with your potential deal... let me know how things work out

On your second thought, I completely understand what both of you are saying!  Both of the view point are heavily threaded like you said... Shawn Holsapple view is definitely discussed in the book Landlording On Autopilot, and I know many people follow that method.  With the duplex my wife and I own, we have always been upfront about being the owners, and we try to just manage their needs/concerns as efficiently and timely as we can!  Best of luck in your investing future!

Shawn Holsapple · Answer

Thanks for easing up on me!  Since I tell my tenants that I am the Realtor for the landlord, it is [in fact] the truth & I don't think sleazy.  Maybe you will change your tune once you have a few tenants calling you all the time!  LOL

Account Closed · Answer

@Justin Schellenberg

Thanks.  I will definitely share details if I manage to get the property.  I think combining both properties on one deed would be beneficial to any exit strategy.

I know I came off harsh and apologize to @Shawn Holsapple for that, but it is definitely not a path I would choose.  I have yet to purchase my first rental property, but I know I will either hire a property manager or be completely upfront with the tenants and manage it myself.  My wife has zero desire to move, so it is extremely unlikely I will encounter a live in half/rent the other scenario.  But even hypothetically I can't envision trying to hide my ownership from my tenant AND neighbor.

Account Closed · Answer

@Justin Schellenberg

I started monitoring this thread because I have my eye on a property similar to the one you mentioned.  The owner is the same for both sides but has yet to show any interest in selling.  In the chance that he decides to sell, I figured this thread might become a great source for information.

That being said, I totally disagree with @Shawn Holsapple and his suggestion to lie to your tenants.  I have seen this brought up in other threads, and I am not the only one to think it is sleazy.  In my area, the owner of the property is just a few clicks away.  Sure seems like a great way to cause a contentious relationship with your tenants.

Justin Schellenberg · Answer

@Shawn Holsapple

My thought was... locking down a larger duplex situation under a nice interest rate and having to put less of a down payment down, but only living there for maybe two years.  But I do see your point with the frustration of maybe living by tenants.  Also the thought of having to resplit them in the future to sell them does sound like a lot of work!  So far the deal has move forward because the price of one side is to high so the numbers don't make since, but I don't no how much of a motivated buyer I am now anyway seeing the work involve to make it profitable/cash flow!

Thank you so much for your experiential wisdom. It has made me think through some things differently

Shawn Holsapple · Answer

@Justin Schellenberg welcome to BP!

This theory sounds good on paper but I know very few people to actually do this with success [except @Brandon Turner ].

To complicate matters further, you are looking at an attached double, which are rare here in Indianapolis, that is zoned as two separate properties.

As mentioned earlier, this defeats the "benefits" of having two doors under one roof/deed.

In addition, this type of property is tough to resell in the future as well.

I'd suggest passing on this one and whole concept - IMHO.  Unless you and your family are already living in a multi-unit have have neighbors on top of you, I don't think it will be an enjoyable experience.  In addition, most duplexes in Indy are very old and in not so nice areas and nicer duplexes in good areas cost too much to cash flow well.

IF you do end up as a landlord of a duplex and living in one side, I would defiantly tell the tenants on the other side that you are "only" the property manager.  Never tell a tenant you are the owner!  I know there are many threads about this but you don't want them calling you, the owner, every hour asking for something.  It also gives you, the property manager, a buffer.  Lines like "I'll have to ask the landlord about that Mr. Tenant" can save you from lots of headaches and expenses...

Justin Schellenberg · Answer

Thanks Joe for the thoughts... sound like I will have to do some research on zoning!

Joe Impagliazzo · Answer

@Justin Schellenberg

I believe your big issue is the units are now zoned as two separate property's, so in order to get it under one mortgage everything would need to be changed before you actually buy the property. I doubt the current owners would agree to that but zoning is not my expertise.  Sounds like it would be easier to have two separate loans.