Benefits of an Owner Occupied Duplex

Hey you guys, Carter here with Crowley Real Estate and Century 21. Today we’re going to go over the benefits of an owner occupied duplex. What I mean by this is you have bought a duplex, you live in one unit and you rent out the other. It’s a phrase called house hacking, as some of you may know, claimed by biggerpockets.com. It’s a great resource if any of you are looking for information on real estate investing.

So what are the benefits of an owner occupied duplex in the Appleton or Fox Valley area? Let’s go over a few of the topics and then I can elaborate on anything if you have questions…

Benefit #1

So topic number one, what is the first benefit of an owner occupied duplex? Well, first off, your mortgage payment is going to be paid by your tenant, which is the BEST. You can own real estate for little to no money out of pocket each month & in some cases come away making money & living for free.

Example: Say you have a duplex that rents out $700 a month and your mortgage payment is 950, which includes taxes, insurance, possibly private mortgage insurance, stuff like that. Well, you’re only coming out of pocket $250 a month to live. I personally don’t know anywhere in the Appleton area where you can live cheaper than that. Also, you’re paying down your mortgage, you’re getting the tax benefits of owning a duplex, but we’ll go into that with the other benefits of an owner occupied duplex. So that’s benefit number one. Your mortgage payment or your monthly expenses for housing is significantly lower.

Benefit #2

Number two, you can start creating a real estate portfolio through owner occupying small multifamily property. You can keep purchasing property every year, move into it, and then after a year move to the next, and move to the next and own quite a few properties all with 30 year conventional loans. The 30 year conventional loan means you pay very little in interest, and once you start paying down those properties over time by the time you’re 30, 40 years old you’re going to have properties that are free and clear.  It’ll pay for your retirement. So that’s benefit number two.

Benefit #3

Benefit number three is the type of loan that you can get to purchase one of these owner occupied duplexes in Appleton. So what are the loan types… An FHA loan you can use to purchase a duplex, a triplex, a fourplex, or a single family house. I would recommend the duplex, triplex or fourplex.

With an FHA loan you’re only putting 3-1/2% down, which is very, very reasonable. With an owner occupied loan they also factor in the tenants monthly rent amount, so you can actually purchase a little bit more expensive duplex if you wanted to. I would say stick around that $150,000 to $200,000 range if you’re looking for a side-by-side duplex. You can purchase an upper-lower for significantly cheaper than that if you would like. If you are going the route of an FHA loan you will have to be aware of the guidelines FHA uses for funding rules. However, if you want to avoid this altogether, talk with a mortgage lender and they should be able to set you up on a conventional 3% down loan. So that’s benefit number three.

Benefit #4

Benefit number four, you get to be a landlord. I don’t know if this is actually a benefit, but it is a very, very key learning process. You have human interaction. You get to learn how to actually operate a business, and landlording is definitely a business, so I would recommend treating it that way.

Over the past 4 years I have personally bought dozens of properties and I for one can say that I’m not a very good landlord, so we hire private property management and they take care of all of our rentals. But it’s a learning process. You will learn. You will know if you’ll enjoy it or not, and it’s always a fun experience.

Is Buying an Owner Occupied Duplex Right For You?

So if you guys need help buying an owner occupied duplex or if you’re looking for a duplex in the Appleton area, a duplex in the Kimberly area, or maybe a duplex in the Neenah area, definitely reach out to me. I’d love to help you start looking or purchasing an owner occupied duplex here in the Fox Valley. Fill out the form below if I can do anything to help you. Otherwise have a great day.