| There is a lot of talk about getting your | | | | few rules about how banks determine whether |
| first house. It's part of the American Dream | | | | or not to provide loans. When you are |
| to get a house and maybe get a dog named | | | | purchasing your first investment property |
| Rover. But maybe someone's first home should | | | | banks will usually not count the rent as |
| instead be a duplex. Why would I propose such | | | | income unless you have owned investment |
| a thing? Is it possible I am a secret Russian | | | | properties for over 2 years. So if a buyer |
| spy that hates American pie? No, there are | | | | first buys a house and then wants to buy a |
| simply too many advantages to buying a duplex | | | | fully rented duplex they will need to be able |
| first. Buying a duplex has a number of | | | | to qualify for the full price of the house |
| financial advantages over buying a house. A | | | | and the duplex combined. This can be |
| lot of people assume that duplexes would sell | | | | difficult especially for someone in the |
| for about twice of what a house sells for in | | | | beginning stages of their career. If a buyer |
| the same neighborhood. This is rarely the | | | | purchases a duplex first, in 2 years when |
| case. Duplexes are more frequently about 1.5 | | | | they are looking for a house they can count |
| times the price of a house in a given area. | | | | the rent from the duplex as income which can |
| So to pick an easy number if a house is | | | | help them qualify for the bigger house |
| selling for 100k then a duplex should be | | | | purchase. 3. Faster Payoff Another |
| selling for 150k. So let's compare buying a | | | | interesting way to look at it is that if |
| house to a duplex. To keep things the same | | | | instead of simply spending the saving you |
| let's assume we have 20k to put down and we | | | | incurred by owning a duplex if you were to |
| are looking in the Austin real estate market | | | | pay off your mortgage faster. So if you |
| so that the taxes are 2.5 percent of the | | | | applied $747.32 to your house it would take |
| purchase price and insurance is 0.4 percent | | | | 30 years to payoff. But if you paid your |
| of the purchase price. 1. Lower Monthly | | | | duplex of $566.68 and then took the |
| Payment To start off with let's look at the | | | | additional $180.64 and applied it to your |
| house. For the house we are going to have a | | | | mortgage you could pay off your duplex in |
| 6.5 percent interest rate. 100k house price | | | | 18.5 years. So in 18.5 years you would have a |
| 20k down payment Monthly Payment = $747.32 | | | | $150k duplex paid off instead of a $100k |
| Moving on to the duplex. Since duplexes | | | | house partially paid off. 4. Greater Benefits |
| usually have higher interest rates we are | | | | of Mortgage Payoff Not only will you pay off |
| going to assume a 7 percent interest rate. We | | | | your duplex faster but once you paid if off |
| are also going to assume that the other side | | | | you will be in a better position. Once you |
| of the duplex is being rented for $650. 150k | | | | pay off your house you are living mortgage |
| duplex price 20k down payment Monthly Payment | | | | free but not payment free. Based on the |
| = $1184.18 Rent Payment minus 5 percent | | | | original assumptions (Austin Texas 2.5 |
| vacancy = $617.50 Monthly Payment minus rent | | | | percent tax rate and 0.4 percent insurance |
| = $566.68 The monthly payment on the duplex | | | | rate) you are still making a payment of |
| comes out to be 31.8 less than on a house. | | | | 241.66 a month for taxes and insurance. In |
| You might get different numbers based on your | | | | contrast once the duplex is paid off you are |
| area. In most areas a duplex leads to a lower | | | | not only living in your duplex for free you |
| monthly payment but there are a few real | | | | are actually getting a profit of $255 a |
| estate markets where the opposite is true do | | | | month. Buying a duplex is not for everyone. |
| always run the numbers. 2. Increasing Your | | | | Some people do not want the hassle of |
| Future Real Estate Purchasing Power Besides | | | | managing a property. And our article is not |
| the advantages due to a lower mortgage | | | | proposing that everyone should buy a duplex. |
| payment there is another advantage over | | | | But there are financial benefits to buying a |
| buying a duplex first. Buying a duplex first | | | | duplex so take it into consideration. |
| allows you to make additional purchases while | | | | |
| buying a house first can negate your ability | | | | If you are looking to purchase a home or |
| to buy additional properties. To understand | | | | duplex in the Austin Real Estate market Ki |
| why this is the case we need to understand a | | | | can help you in your search. |