If torn between the acquisition of a home and a rental unit, you can make a compromise that gives you the best of both worlds. You can realize both your investment dreams without losing the advantage of owning the roof over your head. A duplex can give you a taste of both sides of the coin.
You can live in one unit and let out the other one. Such a move enables you to lower the cost of your mortgage and will a little luck, some additional income. However, before rushing to make such investment, you need to take a few precautions.
Research the Market
Ideally, the other units in a duplex should help you pay off the mortgage on the loan each month. As such, you need to be sure of the level income you stand to collect from units each month. A detailed market survey can help you make an accurate estimate of the possible return on investment.
Otherwise, you are likely to make a crucial mistake capable of running your finance. More than just comparing income, you need to consider, the population and their income levels. Such a move enables you to calculate your income with a high degree of accuracy, allowing you to make an informed decision.
Get the Money Factors Right
Naturally, duplexes and multiplexes carry a higher asking price than single-family dwelling units do. Hence, you need to make sure your finances are in order before approaching a HUD multifamily lender for funding. If relying on the rental income from the units to cover part of the mortgage, make sure they are occupied.
You stand a better chance of success if you can back your claim with financial statements. Putting a sizable down payment in addition to having a high credit score and a low debt income ratio also helps your creditworthiness.
Multi-homes make an incredible way to kick off your real estate investment journey. These useful tips ensure that you make the right call when making your investment decisions.