Can a Duplex Be Built on a Single Family Plot in Seattle
The financial side has been great as well. Our housing expense dropped about 50% since nosotros moved. Housing is the biggest expense in an average household upkeep. It'due south a big win if yous tin can reduce it. Today, I'll share the pros and cons of living in an owner occupied duplex.
Pros of living in our duplex
Many expenses are halved
It's expensive to own a home. The mortgage isn't the only bill homeowners have. You take to pay property tax, insurance, repair, maintenance, utilities, landscaping, and more. Living in an possessor-occupied duplex is very helpful financially. I can deduct 50% of these expenses against the rental income.
- Shared utilities – h2o and trash.
- Shared appliances – washer and dryer.
- Exterior maintenance – pigment, gutter, roof, deck, and landscaping.
- Insurance, holding tax, and mortgage interest. (I'll have to double bank check these when I do revenue enhancement adjacent year.)
All these helped reduce our housing expense significantly. The mortgage at our duplex is also a little smaller. That helped too.
Passive income
Now that nosotros're down to one rental unit, we brand well-nigh $250/month in passive income from our tenant. That's non a lot, but it is way amend than nothing. We'll also salve about $one,200/month by living in a duplex instead of our onetime condo. These 2 add together up to almost $1,500 per month. That's a big swing.
Learn to be a landlord
Living in an owner-occupied duplex is a nifty way to learn to be a landlord. Real estate investing is a proven way to build wealth. All the same, most people don't know if they can handle being a landlord. Living in an owner-occupied duplex is the easiest way to try it out. It's not much more piece of work than owning a single family home. The only big difference is that you'll take to manage one tenant. If this is too difficult, then you will know that rental investing isn't right for you.
Less down payment
Usually, investors need to come up with 25% down payment for a rental property. However, the down payment can be much lower if y'all alive in a unit of measurement. The FHA guideline allows you to purchase 2-4 plexes with as fiddling as iii.5% down. If y'all don't qualify for an FHA loan, then you'll have to go with the conventional mortgage. You'll have to cheque with the bank, but I believe the minimum down payment is 15% for an owner occupied duplex.
Easier repair and maintenance
Repair and maintenance are fashion easier when you alive onsite. Our former condo was just a few miles away, but information technology was e'er a pain to work on anything at the duplex. I'd forget to bring a tool or the keys and had to go back home to become them. Last week, I fixed our sidewalk and got it washed relatively speedily. I checked on it occasionally and information technology turned out okay. It would have been very annoying to come past a few times throughout the twenty-four hour period to bank check on the concrete. It's merely easier to work on repairs now that I live here.
A corner of the sidewalk cracked and sunk. It was a tripping hazard so I fixed it.
Flexibility
The duplex gives us a lot of flexibility. Currently, nosotros live in one unit and rent out the other one. Nosotros could take over both units when our son is older and needs more space. One time he's off to college, nosotros could rent the other unit out over again or put it on Airbnb. I think this is better than buying a bigger home and then downsize to a small abode as the family situation change. Real estate transactions cost a ridiculous amount of coin. Information technology's all-time to avert moving if you tin can.
Cons of living in your duplex
Of form, there are some cons besides. Nothing is 100% positive, right?
Shared housing
The biggest issue with living in a duplex is sharing the infinite. We share the basement, laundry expanse, and the g. It isn't a large deal to us because we lived in a condo earlier moving here. We had to share the mutual area there also. Notwithstanding, it might be tougher if you come from an SFH.
Also, our tenant lives in the upstairs unit of measurement. Luckily, he's a relatively quiet person. We hear him walking effectually, only he doesn't lookout much Boob tube or listen to loud music.
Working with a tenant
Our long-time tenant is awesome. He's a very overnice guy, non too noisy, and he has a secure job. To summit it off, his girlfriend lives in Europe so she's rarely here. Basically, he's the tenant from heaven.
However, even the best tenant needs a little managing. For example, I had to remind him to change the accost for the rent payment to our new address. Also, we worked on clearing out the basement a scrap when nosotros moved in. It was getting crowded with junks. Lastly, his balcony door rotted out and water was seeping in. He didn't mention it until I discover a leak downstairs. Tenants but don't pay attention to these issues. I'm not complaining at all. Our tenant is slap-up, simply it's just easier when you only have to bargain with your family.
Oh, I about forgot. We had to watch ourselves more in a duplex. Occasionally, I get mad at my son and yell at him. Now, I feel I take to continue it down so our tenant doesn't call back we're dysfunctional. I guess that'due south a good thing.
A duplex can be difficult to notice
It tin can be hard to detect a multiplex in the correct location. When nosotros lived in the suburb, I wanted to buy a duplex, simply couldn't observe annihilation near my old work. There weren't many multiplexes in the cookie cutter suburb. There were a few, but they were all on the wrong side of the track. Those areas served low-income families and they usually accept more bug.
Fortunately, our current duplex is in an urban area and it's a smashing location. IMO, it's really hard to find the right multiplex in the suburb. I assume they are pretty much nonexistent in the rural area. In that location is more availability in dumbo urban areas. Even so, it'southward harder to find than a condo or an SFH.
House hacking by living in a duplex
All in all, I think living in an possessor-occupied duplex is a great way to reduce housing expense. Housing expense is and then high on the west coast now. The median home value in Portland is over $425,000. This is inexpensive for a big city on the west coast. The median price of a home in Seattle is almost twice that. Forget nearly owning a home if you live in San Francisco. The median price of a home there is over $1.half dozen one thousand thousand. That'south crazy.
One style to reduce the pain is to live in an possessor occupied duplex. It's working out very well for us and then far. This is what I should have done when I offset moved to Portland in 1996. Oh well, that's life. We make mistakes and learn along the way.
Okay, information technology'south your turn. Is housing expense your biggest monthly expenditure? What exercise you recall about living in a duplex to reduce housing expense?
If you don't want to be a landlord, you tin still invest in real estate. REITs accept done extremely well over the terminal decade. Yous can invest in them through your brokerage. Alternatively, you lot can try real estate crowdfunding. It'due south a new fashion to invest, therefore riskier than beingness a DIY landlord. However, it'due south a lot more passive. Yous can read more well-nigh my existent manor crowdfunding investment here.
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Joe started Retire by 40 in 2010 to figure out how to retire early. Afterwards sixteen years of investing and saving, he achieved fiscal independence and retired at 38.
Passive income is the key to early on retirement. This twelvemonth, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the U.s. and so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help y'all reach financial independence.
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