Author Topic: To purchase a single family home or duplex?  (Read 316 times)

mattmando

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To purchase a single family home or duplex?
« on: September 06, 2018, 12:10:11 PM »
My wife and I are looking to buy our first home. We have $240,000 saved to put towards a down payment.  We can comfortably afford a $3700/month mortgage. We're in the LA housing market where the homes in our price range are in really poor shape, so we're considering a duplex where we would rent the second unit as a way to get into a higher quality property and build equity faster.

We're considering a $750k home in need of some minor improvements or a $1.2M duplex where we would rent the second unit.

I appreciate your advice and insights here on how to weigh the pros/cons here.  Thanks in advance!

waltworks

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Re: To purchase a single family home or duplex?
« Reply #1 on: September 06, 2018, 02:21:45 PM »
Questions to consider are:
-How much can you rent the other side out for? If the delta between the SFR and duplex is a cool $500,000 you'll need to be renting that side out for *minimum* $4000 or so to make it vaguely worthwhile.
-Do you want to be landlords/share a building with tenants?
-What are the applicable laws like where you live? Very pro-tenant? Very pro-landlord? How hard would it be to evict a bad tenant? Because if you need to evict someone who lives on the other side of the wall from you, that's a whole lot bigger of a deal than someone who lives in a place miles away.
-Can you actually get a loan for a million bucks? Because the lender won't generally count theoretical rental income when determining whether you qualify for this loan.

Given the info you've provided so far, I'd probably either keep renting or do the $750k (ouch) fixer-upper.

-W