Las Vegas Real Estate News

Party Of Two – Buying A Duplex

A duplex is a building with two units, often side-by-side and are commonly rented out to generate income. In this case, we’ll look at the idea of buying a duplex and renting out the other side.

The Advantages to Buying a Duplex

  • Affordability - Duplexes are often only a little more than the cost of a house in any given area. You end up with two livable units for the price of one.
  • Help with the mortgage - You can rent the other side out and make some money to help pay the mortgage. This is a great way to build equity, particularly if you make sure that you’re paying the whole mortgage yourself every month. That way, your tenant’s payment helps to build your equity more quickly.
  • It’s a great place for mom and dad - If your parents are getting older, you can give them a place to live while still having your own space. This can make aging easier and might even give you a built-in babysitter.
  • You’re building equity - Even if you’re only paying yourself “rent”, you’re building equity, something that renters don’t do. Slowly, but surely, you are making yourself a better nest egg by gaining equity.

The Disadvantages to Buying a Duplex

  • Living with your tenants - You have to be careful about the relationship that you create. If they feel they can come by anytime or that you’re friends, they might take advantage of you. They might try to constantly have you rush to fix things or they might try to be late on the rent. The line between business and friendship can blur very quickly.
  • Rental income is never guaranteed - Depending on the rental market your area, it can take months to fill an apartment. This can have you floating the entire mortgage yourself.
  • You’re the one to call - As a renter, you can call your landlord when something is broken. Now you’re the person to call. That can get exhausting and expensive in a hurry.

Some Ways to Make a Duplex Pay

  • Inspect it well - Old appliances or insect problems will become your problem. It won’t just be you. You will have a tenant to answer to. Make sure you’re very clear on the issues your duplex might have.
  • Plan to pay the whole mortgage - Don’t count on rental income. It’s nice when you’re getting it, but you have to be able to pay for the whole thing yourself. If you have a hard time renting your apartment out, you don’t want to lose the whole thing, including your home.
  • Screen people very well - Really good renter screening can save a lot of hassle. Use a service to help you screen everyone very well. You don’t want to find out too late the person next to you is a drug dealer or has a history of walking away on rents.
  • Have savings for the big stuff - Have a savings account for appliances that go out or to fix the apartment if the tenant tears it up. You don’t want to have to eat ramen for a year because the refrigerator or water heater went out.
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