{"id":4069,"date":"2024-05-22T07:36:36","date_gmt":"2024-05-22T11:36:36","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=4069"},"modified":"2024-06-16T10:08:45","modified_gmt":"2024-06-16T14:08:45","slug":"dreaming-of-homeownership-is-a-duplex-worth-considering","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/dreaming-of-homeownership-is-a-duplex-worth-considering\/","title":{"rendered":"Dreaming of Homeownership: Is a Duplex Worth Considering?"},"content":{"rendered":"\n
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Got homeownership dreams<\/a>? A duplex could be a way to break into today\u2019s housing market. A duplex, of course, is a home property made up of two units. Typically, the two units share a wall but have separate entrances. So a duplex is essentially a house, divided into two homes.<\/p>\n\n\n\n

With home prices as high as they are, many duplexes can and do offer accessible price points. But what\u2019s the tradeoff?<\/p>\n\n\n\n

As with any type of home property, a duplex comes with plus and minus factors. Let\u2019s take a look.<\/p>\n\n\n\n\n\n\n\n

A Duplex Is a Classic \u201cMissing Middle\u201d Home<\/h2>\n\n\n\n

If you\u2019ve looked for starter homes recently, you know we\u2019re down to slim pickings. A duplex deed represents the kind of ownership that\u2019s filling in for the \u201cmissing middle<\/a>\u201d housing market. Much like backyard cottages<\/a> or condo properties, duplexes can provide price relief when free-standing homes are just out of reach.<\/p>\n\n\n\n

Here you might wonder: What sets a duplex apart from a condo? Both are less expensive alternatives to freestanding homes.<\/p>\n\n\n\n

Generally, condo buildings have more than two units. The association holds the master deed, and owns the property that the buildings stand on. The condo deed gives the buyer full control over the inside of a unit only.<\/p>\n\n\n\n

With a duplex you can own your piece of land, perhaps including a small back yard. Of course, that means you do all the yard work, too.<\/p>\n\n\n\n

The duplex owner can acquire just one unit\u2019s deed, or both deeds. Some buyers take title to both units, then live in Unit A, and rent out Unit B. The rental home works for the buyer, offsetting the surging costs of housing. It\u2019s just one way hopeful buyers get the best of a mean market.<\/p>\n\n\n\n

What About the Deed? (Or Is It Deeds?)<\/h2>\n\n\n\n
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Duplex units are on one lot but have separate street numbers. These are different numbers, or different letters \u2014 A and B, usually.<\/p>\n\n\n\n

Each has its own deed.<\/p>\n\n\n\n

Each parcel is individually taxed.<\/p>\n\n\n\n

The benefits of this setup?<\/p>\n\n\n\n

If you\u2019re buying one side of the building, you\u2019re likely able to get a lower price than you\u2019d pay for a freestanding house.<\/p>\n\n\n\n

Or, you might be planning to purchase both housing units. That would mean acquiring two deeds through one transaction. And if you go to sell later, you\u2019ll be able to list your properties separately.<\/p>\n\n\n\n

Check out Deeds.com\u2019s take on <\/strong><\/em>buying and selling a renter-occupied home<\/em><\/strong><\/a>.<\/strong><\/em><\/pre>\n\n\n\n
And How Is the Duplex Financed?<\/h2>\n\n\n\n
If you\u2019re just getting the deed to one unit, then the mortgage is straightforward. As long as one of the units will be your primary home, you may apply for a government-backed loan or<\/em> a conventional loan. First-time buyers who haven\u2019t had a chance to build up credit may find the FHA loan works. Some duplex buyers with modest incomes go with Freddie Mac\u2019s Home Possible\u00ae loan.<\/p>\n\n\n\n
Now, say you\u2019d like to acquire both deeds and live in one unit while drawing income from renting the other one. You can ask the mortgage company to count up to 75% of your expected cash flows as income when applying for the mortgage, Experian explains. Expect to show that you have a renter waiting in the wings. Or at least be ready to obtain a professionally prepared rental income projection.<\/p>\n\n\n\n
Rental income allows a deed holder to earn income and <\/em>build equity. While you must declare the income<\/a> to the IRS, there are also tax breaks for the costs of renting out the second unit (to a non-family member).<\/p>\n\n\n\n
All things considered, buying a duplex is a relatively simple way to become an investor-owner. Financing an owner-occupied duplex means you just have to put 15% down. That\u2019s an easy hurdle \u2014 compared to the 25% payment typical for investment properties.  <\/p>\n\n\n\n
So, Is There a Duplex Mortgage?<\/h2>\n\n\n\n
Here\u2019s where a mortgage consultant can help. A pro can tell you the options, which might be:<\/p>\n\n\n\n