Before You Buy Your First Duplex

If you’ve been renting for several years, you may be starting to think it would actually improve your budget if you bought a duplex, instead of renting one.

So now what?

The first thing you’ll need to do, if you haven’t already, is save enough for a down payment. Depending on where you live, this may be as little as 3 percent of the purchase price of the duplex. In some locations, there may also be down payment assistance available.

You will also need to have money in reserves for things like closing costs, property insurance and a home inspection.

Talking with a good lender who is familiar with duplexes early in the process is also important. He or she can help determine the amount you’ll need to save, as well as help you repair any issues that may appear on your credit report.

If you are in the market to owner occupy a small multifamily property, it is extremely important you make sure the loan officer is very clear on that, and that he or she has verified with the financial institution the required down payment for the loan program.

Buyers often come in and tell me their lender has approved them for a 5 or 10 percent down conventional mortgage. In those instances, I advise my client to double check. Those loans are available for single family purchases, but I currently do not know of a comparable program for multifamily properties.

Next, you should try to meet with a Realtor who specializes in investment property. How do you know? You may see their name on duplexes you’ve seen for sale or (hint), read their blog.

A duplex specialist will educate you on how to calculate what your portion of the payment will be, as well as be able to advise you as to any local licensing requirements you may face.

An experienced Realtor will also help you determine your short and long term goals. For example, sometimes the neighborhood you want to live in isn’t the location that will provide the greatest cash flow.

If you want more information about the duplex buying process, be sure to download my Duplex Buyer’s Guide or send me a note.

I’d be glad to help you out.