Duplexes are the perfect solution for the first-time home buyer. A duplex is a structure used for residential purposes and consisting of two living units with a common wall.
Duplexes Provide Dual Income
You can either rent out both units or live in one unit and rent out the other. Either way, the income form the rented unit(s) will help you pay for the mortgage. Additionally, if you buy correctly and rent both units, the rental payments from tenants should not only pay your entire mortgage, property taxes, insurance and maintenance, but should also create monthly income for you.
If you live in one of the units, your monthly mortgage payment will be less because of the rent from the other unit. You can live in your unit and as the property appreciates, you can refinance to pull money out to buy a single family property. Then you can rent out the other unit.
The rental income from the duplex should not only be sufficient to pay the entire payment for the duplex itself, but it you bought correctly, it should also create enough income to put cash in your pocket which can be used to help make the payment on the single family residence.
I call this strategy, “bootstrapping.” Bootstrapping is refinancing money out of one property to use to purchase another property. Bootstrapping is a very powerful wealth building strategy.
Easy to Qualify for Duplex Financing
Duplex financing terms are easier than single family financing terms. Along with other requirements, most lenders base their home loan qualification on your net monthly income. When you finance a duplex, lenders will allow you to use the rents from the duplex to qualify. For example, if you make $1,500 per month and the duplex generates another $1,500 per month, your income for the loan would be $3,000 per month.
More information on buying triplexes