Any duplex owners in Boston, or in general.

[Marko34]

So my best friend and I and likely his GF are thinking about moving into a place with maybe one other person around Boston to save costs since its an expensive city to live in.  But our ultimate Idea is to hopefully sooner rather than later go in 50/50 on a Duplex around Boston somewhere. The obvious idea is an investment for both of us, the three of us could live in one side and the other side could be rented to cover the majority of the mortgage.  Living close to rent free more than making money immediately is our goal.  Then as we get older, along with other investments, index funds, and IRAs, 401ks etc, as we get better at the landlording thing, dive into more property ownership.  We are both 27 and make decent 40-60k salaries that will only increase over time.  So we hope to start small but build towards FI with the help of the cost of living in Boston.  Having that Duplex make us money for many years to come down the road.

Anyone start this way?  Good thoughts, or negative thoughts?  It seems like a pretty solid way to lower your rent for many years, then as a way to make profit down the road.

[waltworks]

Lots of people do this. You might want to do a search for "househacking", or just "duplex", it comes up every week. In general, a great way to live somewhere for cheaper than you otherwise could, though it might still be better to rent, just depends on your situation.

I would avoid buying anything with friends, though. Buy property with a spouse/longterm committed partner, or alone, or not at all. There will inevitably be problems and ruined friendships otherwise.

-W

[waltworks]

No, OP will occupy the property. Banks will lend on it at residential rates.

_W

Wouldn't you need a larger down-payment since this would be a business loan and not a residence mortgage? How would this be financed if that is the route you were taking?

[KungfuRabbit]

dont buy a house with friends please.  that has a high chance of ending poorly.  so many ways it could go wrong.

[Icecreamarsenal]

I was 27 recently. There's a reason all these cautionary tales exist. I'm 33 now and I'd like to warn you against doing business with friends.
Most likely you will proceed, then use your experience as a cautionary tale to the next 27 year old.
Househacking, by way of Brandon on bigger pockets, is a tried and tested method for building equity. Good luck.

[money_bunny]

Please be very careful doing business with friends or family. When it goes well it's great. When it goes poorly it can ripple through a group or family.

Gifts are nice, favors are good, when it comes to money it's serious.

[archben82]

My wife and I bought a duplex five years ago and have been living there/ renting out the other half ever since.  If you live in an area where you can find tenants you want to live next to I say go for it.  It's been a great decision for us, and I think helps to create a mindset of being frugal elsewhere in your life.  We're constantly amazed at friends and family who fork over large chunks of their monthly income towards the mortgage, and wonder how they do it.

I agree with everything else here though, that I would be extremely cautious in buying property with a friend.

[Nate R]

No, OP will occupy the property. Banks will lend on it at residential rates.

_W

Wouldn't you need a larger down-payment since this would be a business loan and not a residence mortgage? How would this be financed if that is the route you were taking?

Not true, at least in 2013. Needed 20% down to get a conventional mortgage in a 2-4 unit property. Not sure if that's still true today. You DO still get a standard residential mortgage, nothing fancy. Just higher down payment requirements and different qualification #s from rent and such.

We bought a duplex in 2013, and moved into one unit. So far, working out pretty well. In the middle of rehabbing the other unit now, which should bring our rent to within $100 of our PITI payment. We do pay water for both units, but overall, been a win for us.

BUT, be careful w/ the friend/partnership thing. The only ship that never sails! You also have to be careful with tenant screening, landlord tenant law, etc.

[trobertson79]

I just searched and found that this thread is the only place on the forum where "househacking" shows up.  Unless the search feature is time limited?  Anyway, thank you so much for giving me that term.  It describes what I've done for 10 years.   I own 7 properties (2 in Boston) and have lived in 4 of them with housemates covering most or all of the bills.  It's probably the most important tool in my wealth building aresnal that has allowed me to save the majority of my income.

[KevBoston]

OP, I'm in Boston, also I'm the same age as you are-- bought a duplex middle of last year, and renting out second unit EXCEPT I did not go into this with anyone else.  I would strongly advise against doing this with a friend.

There is too much at stake that could go wrong-- what if one person wants out in the future? What if priorities change for one party? What appraisal price would you use if one person wants out? How would you split improvements? And since this would involve potentially a mortgage, and one person wants out... will you be able to refinance by yourself, etc. etc. Legal leg work would need to be done and a lot to be considered. I don't know too much about division of duplexes into condos, but perhaps that would be a way to go-- purchasing the house together but deed'ed as separate properties?

With that said, OP, happy to grab a beer and talk more about it. I haven't met many MMM followers in the area.

[Nate R]

I just searched and found that this thread is the only place on the forum where "househacking" shows up.  Unless the search feature is time limited?  Anyway, thank you so much for giving me that term.  It describes what I've done for 10 years.   I own 7 properties (2 in Boston) and have lived in 4 of them with housemates covering most or all of the bills.  It's probably the most important tool in my wealth building aresnal that has allowed me to save the majority of my income.

BiggerPockets.com uses the term a lot more. Try there for more info and insight on House Hacking. :-)

[trobertson79]

Kev and OP, Also in Boston here.  Beers in the park? :)