Is a duplex the best option for our FHA loan?

Question

My husband and I are both still in college and were hoping to buy a residential MFH with a FHA loan, somewhere around Johnson County in Kansas. However, with the rates and conditions of any triplexes and fourplexes we could find (we did find one, but it's in the Pendleton Heights suburb of KCMO, so we were worried about it being too dangerous of an area), we were wondering if it's worth it to buy a duplex and rent out the other half to help pay the mortgage, or if it's more worthwhile to rent an apartment and try to save up to buy a residential or commercial MFH later?

Dominic Mazzarella · Answer

If you're still in college and working with an FHA loan, a duplex can be a solid option. Renting out one side can help offset your mortgage, which is a huge advantage while you're building financial stability. It also gets you into real estate sooner and lets you start gaining experience as a landlord. That said, location matters a lot. If the only MFH options you're finding are in areas you're not comfortable with, it might be worth focusing on a duplex in a better neighborhood.

Saving up for a larger property later is a valid approach too, but keep in mind that real estate tends to appreciate over time, and waiting might make it harder to enter the market later. Although there are advantages to waiting too, such as if interest rates continue to drop. A duplex could be a great compromise that lets you start small, build equity, and learn the ropes while mitigating some of the financial risks.

Do you and your husband have any kind of long term strategy in mind? That might give more informed answers here. And by the way, good for you guys for getting started early. I know many of us didn't get into this game until later in life so my hat's off to you.

Milton Chamberlain · Answer

Hi! I love that the MHDC loans are offering 0% down payment options for duplexes, I would look into that if you havent already. I sent you a DM! :)

Brittany Minocchi · Answer

Hey Ella!

Duplexes are a little easier than 3-4 units with FHA since they don't have to meet self-sufficiency requirements. As long as you're prepared to be a landlord and live next to your tenant for at least a year, house hacking is a great way to get started. Not only can you collect rent to go towards your mortgage, you're also building equity that can potentially be used down the road for your next home or investment.

Caleb Brown · Answer

House hacking is great. Johnson county is expensive, nicer suburb. You will be spending 350-400K for a duplex. They will be a 2/3 bed. Rents are strong and you can do STR to help boost cashflow. I would encourage house hacking, you won't be cash flowing but it helps you save while you get your foot in the door with low DP. It will also give you a learning experience. Commercial is a different beast and would not go at that out the gate without some experience first.

Is a duplex the best option for our FHA loan?

Is a duplex the best option for our FHA loan?

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