Complex Duplex: Getting Started With Multi-Family Real Estate

When most people think about multi-family real estate, typically what comes to mind are apartment complexes. For those interested in real estate investment properties but don’t want to fully jump into large complexes, duplexes, triplexes, and four-plexes are the way to go.

START SMALL

The biggest benefit from doing a small multi-family real estate deal is the opportunity to live in your home with a significantly lesser mortgage. You can rent out your empty living quarters, lowering your monthly mortgage which potentially allows you to live rent free. By starting small with less tenants, you can educate yourself on the landlord business before committing to a larger investment deal.

DUPLEXES ARE EASIER TO PURCHASE

There are more duplexes available, and they are easier to find than larger multi-family properties. You also don’t have the added pressure of building a relationship with a commercial real estate broker. Purchasing a duplex is as simple as calling up your real estate agent and asking for duplexes for sale.

CONSIDER AN OWNER-OCCUPIED PROPERTY FOR MORTGAGE BENEFITS

There are mortgage advantages to a property that is classified as owner occupied over a non-owner occupied. Mortgage lenders tend to offer favorable rates to those purchasing properties they will reside in. Mortgage lenders consider a two-unit property as one property. You may be able to qualify for a larger mortgage as a lender takes into consideration the income generated from the rented out unit.

TAKE TIME TO LEARN YOUR TAX BENEFITS

Most know that there are tax write-offs when buying a home, such as deducting the mortgage interest you pay. Similarly, multi-family residences reap comparable benefits. For instance, if you own a duplex in which you reside and rent out, you not only get to write off the mortgage interest rate but also expenses that go into the rented unit. Expenses that can be written off could include fees accrued in attempt to rent out the property, fees accrued to manage the property, repairs made to the rented-out half, and even utilities.

YOU CAN USE YOUR VACANT DUPLEX AS A VACATION RENTAL

You can potentially earn more money by renting your empty duplex through a vacation rental site such as Airbnb rather than renting it traditionally month-to-month or through one-year leases. Vacation rentals are short term so you can charge more. Vacationers are also willing to pay more for a full private apartment than a single room in a home. A duplex gives vacation renters the best of both worlds. They get full privacy with the comfort of you, the renter, next door. Be sure to look into your local laws for vacation rental guidelines. Not every city has the same set of rules. For example, larger and more populated cities may have a stricter set of rules.