Starting out by purchasing a duplex

[Rocco Grossi]

Hello everyone my name is Rocco and I am new to Biggerpockets. Ok, so my plan at first is to buy a duplex, occupy one unit and rent the other. Is anyone opposed or have any advice about this? This would be my first property and I would be getting an FHA loan. Property would be in either Delaware County, PA or Wilmington, DE. PA property tax is much higher in PA than in DE which is definitely something I have been thinking about. I do not have much money to put down on the loan, only the minimum 3.5% and closing costs if need be. The initial plan is to obviously have rental pay for majority, if not the whole mortgage payment. This will give me and my girlfriend an opportunity to save money, then in 2-3 years I would like to purchase another property. I am still new and doing my research to understand the language. If anyone has any suggestions or advice I would gratefully appreciate it. Until then I will continue to educate myself on this business to find out my best starting approach. Thanks!!

[Geetika Casmon]

Buying a duplex as your first property allows you to begin learning the business as well as become a landlord. My husband and I did the same thing. We bought a 2 unit property in a nice neighborhood which needed work using an FHA loan. We wanted to use the money we saved up to help fix the place, not use it all on a down payment. We luckily inherited tenants in the purchase, but we renovated our unit (just the kitchen) and made minor improvements to the overall property. After one year we got the loan refinanced. We got the property reappraised and increased value by $100k. We were able to drop the FHA loan, thus removing the pmi and lowering our monthly payment. You can only have one FHA loan at a time. Since we refinanced, we now have the option to get another property with an FHA loan if we wanted. We learned quite a bit through the process. One thing to keep in mind, since we lived in the building, we set clear expectations that all request for repair should come through email (unless it's an emergency). Of course you can make this sound good by stating that you prefer to have a documentation trail for both parties. You don't want people knocking on your door any time they wish.