You’re racking your brain, scribbling down all the pros & cons you can fathom, about buying your first property. You’re weighing the options of continuing to pay rent (for someone else’s mortgage), using your savings to buy a home, or maybe even purchasing a property to rent to others.
Guess what? There’s a common wisdom amongst real estate gurus that allows you to do both— Buy a duplex! Think about it, you can live on one side, while renting out the other side to defray the cost of your mortgage, often paying less than rent, all while building up greater equity.
The reality is, wealth building by buying rental properties simply isn’t feasible for everyone. Banks usually require you put down at least 20% on an investment property. With booming real estate values, saving up that kind of dough is a daunting hurdle for most. Investing in any real estate can be a long term commitment, so your first move better be a wise one.
However, buying a duplex, advances you two moves, instead of one. Yes, you might be temporarily suspending your dream, but it’s a short term sacrifice for a much bigger picture— Acting strategically to use other people’s money to purchase an asset, while taking advantage of conventional loans and low down payment opportunities for first time home buyers.
Sure, you might have to settle for more modest accommodations in comparison to buying a single family home— But you could also qualify for a larger mortgage, because lenders may take the potential rental income into consideration. Rents vary by area, but as long as you are an owner-occupant, you can still take advantage of conventional loan rates, and even qualify for the same low-down-payment options as you would, buying a single-family home.
Don’t get me wrong, buying a single family would be okay. It would appreciate in value, and you would have some equity to use in the future for an investment property or other major expense like college tuition.
Let's face it, not everyone is meant to be a landlord (we will look at the cons of owning a duplex in our next post)— But it's worth considering if the lure of building wealth through real estate appeals to you… It’s an excellent way to start your rental income journey.
If you have question, just want to chat or would like to learn more— We’re here for you! Please give us a call. Steven Depa (530) 520-8672
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