3 Reasons You Should Consider a Duplex as Your First Home Purchase

by | BiggerPockets.com

When most people think about buying their first home, a nice little brick house with a white picket fence comes to mind. And while there’s nothing wrong with this, maybe you should actually be thinking about a duplex.

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3 Reasons to Consider a Duplex

If you’ve never thought about owning a duplex, then you’re probably unaware of just how many exist in your market. Duplexes are everywhere, and they can be extremely wise investments in certain situations.

While you probably don’t want to buy a duplex if you have a family with kids, it’s perfect for someone who is young and single (or newly married). Here are a few of the benefits you’ll get to enjoy.

1. Mortgage Benefits

Before you can even consider buying a duplex, you have to get your financing squared away. As On Q Financial explains, “The pre-qualification process is the best way to determine the numbers that are right for you. Early in your search, you can work with a mortgage professional to get prequalified and search for homes within your wants, needs, and budget.”

What you’ll find is that a duplex may actually help your mortgage situation, if you plan on renting out the other half. For example, let’s say the mortgage on a duplex is $1800 per month, but you can rent out one half for $1,000. You’re essentially getting 55 percent of your mortgage covered. Not only does this save you money, but it could also help you build equity much quicker (if you choose to make larger payments).

2. Tax Benefits

As you’re likely aware, you can deduct the interest on your mortgage come tax season. And while you can only write off the side you live on (in a duplex), you can gain access to additional write-offs by renting out the other half. This includes fees accrued to rent the place, as well as things like repairs, maintenance, and utility bills (if you share in them).

3. Ability to Learn a New Trade

Another added benefit is that you get to learn the ins and outs of the landlording business firsthand. This will either show you, at an early age, that it’s something you’re not interested, or it’ll give you the experience and confidence needed to launch a career in real estate investing.

Acknowledging the Downsides

Duplexes aren’t perfect. In full disclosure, there are some potential disadvantages that you need to be prepared for if you plan on investing in one. The two biggest are:

1. Lack of Privacy

For some people, the lack of privacy that comes with living in a duplex that you own is just too much. Not only do you have someone living just a few inches away from you at all times, but there’s also the risk of late-night knocks on the door. If the air goes out or a toilet gets stopped up, there’s not hiding. You’re on call 24/7.

2. The Unknown

Finally, there’s the unknown. In a duplex, there are two of everything—including toilets, appliances, and fixtures. This means there’s twice the likelihood that something will break down and you’ll have to fix it (cha-ching!). There’s also the risk that the other half will sit vacant for a period of time, resulting in no rental income. Keep this in mind as you weigh the pros and cons.

risk-paradox

Give Yourself a Financial Headstart

When it comes to buying your first house, perspective is key. You have to realize that you aren’t going to be in this house forever. In fact, most people stay in their “starter” homes for less than five years. Think about the pros and cons, weigh them against each other, and determine whether or not a duplex will work in your situation. For most young homebuyers, it turns out to be a smart decision.

Are you considering a duplex for your first home purchase?

Leave a comment below!

About Author

Larry Alton

Larry Alton is a professional blogger, writer and researcher who contributes to online media outlets and news sources. A graduate of Des Moines University, he still lives in Iowa as a full-time freelance writer and avid news hound. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing.

12 Comments

  1. Mark Jones

    I’m living in a duplex with two kids under six. I haven’t had any issues or complaints. My tenants are typically young professionals. The duplex is pretty ideal for the situation. The units are side by side and the shared wall is a plastered block wall.

  2. David Etenburn

    It’s exactly what we did 20 years ago. And you nailed the pros and cons. In fact, now that the kids have moved out, we are considering downsizing and turning this house into a triplex; although using the equity to buy another 2-4 plex is an option as well.

    It’s good to have options! 😉

  3. Eric kissinger

    Great article!

    I was wondering, does anyone know if a “mother in law” ADU in a single family home has the same tax benefits as a duplex? It is still 2 units under one roof and the utilities are shared, just curious if it is deemed the same tax situation since the house is not officially a duplex due to zoning?

    • Kevin Dupuis

      Not 100% sure (and also not a tax pro) but I believe duplexes are essentially SFR in most considerations, same as your personal residence with Granny unit. I believe what matters is if you live on the property or not (Personal residence vs investment property).

      What tax implications are you referring to?

  4. Kevin Dupuis

    Not a professional mortgage broker or lender but have extensivy researched duplexes in my area for our own house hacking and recently nearly purchased one in the SF area (ultimately stepped away from deal…see my posts for more).

    One point to keep in mind is lenders we spoke to would not consider future rent in the income portion of our loan qualification. You may experience differently but my advise would be to run your purchase amount numbers ignoring the rent. Of it pencils without it, you know you’ll be money ahead when it is rented.

    Happy investing all!

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