Consider a Duplex for 1st Home
First Time Buyers
November 21st, 2008
As a first time buyer starting your home search you are probably considering the type of home, features, location, etc. that you would like to purchase. One type of home you may have overlooked is a duplex,triplex or fourplex. For many first time buyers this is an option that really works out well.
I can tell you from personal experience that buying an income property as your primary residence might be the best decision you could make. I know, I did it. A number of years ago I was between homes and renting. A single Dad at the time, my Son and I lived comfortably enough in a rental condo, that it is until it was put up for sale. So, we moved to another rental house and guess what? It went on the market about 6 later! Once again we were moving. It was apparent by that time that renting did not give me the stability and control of my situation that I preferred so I started looking at home purchase opportunities. Trouble was, the projected payments were so much more than the I rent I had been paying I was going to have to make some serious budget choices. In fact, without raiding my 401k it was borderline impossible. I started considering alternative plans. Keep renting? I knew long term buying was my best choice but how? It was then that I came up a plan to have a renter help with the mortgage. I did not however want a roommate. Solution? I bought a duplex. The cost was about the same as a single family home but with the rent I collected my expenses were basically the same as when I was a renter. Since it was my primary residence it qualified for FHA financing and I purchased with just 3% down payment. Not much more than a security deposit and last month rent. Because a duplex is very easy to convert from a primary residence to an income property there is no need to sell when you decide to purchase a single family home in the future.
We have done just that. Sandee and I still own our duplex and it more then pays for itself while it increases in equity and ultimately will provide income during our retirement.
The same thing can’t be said for the house most people live in. Sure, years from now you could downsize but unless you have moved through a series of price ranges to an expensive home will that really provide significant income? Probably not. I think most people are going to have developed a certain expectation of lifestyle by that time and not likely to move back in to a starter home.
Being a landlord is not for everyone of course but we have found it to be rather rewarding both financially and personally. We have tenants that we really enjoy and by making sure to carefully screen before renting we have so far avoided the nightmares that some landlords have experienced.
At this time there are quite a few income properties for sale in Shasta County. Many of them are priced below single family home prices and are definitely worth consideration to any first time buyer interested in developing long term wealth.
