Should I sell my house and buy a duplex?

Question

I'm thinking about selling my house and buying a duplex, but to do so I would want to move to SW Florida and I'm not sure if I should live in one side and rent the other side or if I should rent both sides and live in a separate place as a renter so I could have some more investment options. Any advise, please consider the fact that I'm self employed and may have some issues getting a mortgage right away unless I use a private lender.

Steve Combs · Answer

The biggest question is about your quality of life. Would you be happy living in one half of the duplex or in an apartment? While you would have cash flow from the rental(s), if you would have regret giving up your home, it is not a good idea. No amount of money would be worth your happiness.

If you are fine with living in the duplex, move into one side for a year while you plan you next investment.

Michael R. · Answer

@Nick Stango I am self employed and have two mortgages -- if you need a reference for a mortgage company, drop me a line and I will inquire with a lender that I work with licensed in VA and can find out who to put you in contact with in Fl.  There are 1099 / SE friendly lenders out there.

To your question -- why only a duplex?  You can qualify for residential lending for up to 4 units.  Other than that, I would echo comments that others have made and add, make sure you have an executable plan mapped out.

I hope that helps.

Francis A. · Answer

A fellow investor  asked this question and I didn't have the answer. This is his scenario.

Home 1: Duplex purchased with an FHA loan.

2 years later...

Home 2: Currently moving out of the FHA financed duplex into a owner occupied SFR (5%) down.

Outside of the requisite 20% - 25% down payment for an investor owned building, he's now thinking of how to finance HOME 3 (multi unit or SFR) and possibly HOME 4 (multi unit or SFR)  and how using an FHA loan again might possibly factor in again.  FHA can be used again (after 36 months is what I've heard) depending on when, where, what etc.  We discussed 1081 one of the buildings into a larger building but he'd rather keep both and add a third.

Thanks!

Chad Duval · Answer

I'm sort of parroting Steve's comments, but I would think long and hard about sharing a property with your tenants. I think it's a great way to kickstart your investing career, but speaking from experience, it can be very stressful and uncomfortable to come home and see them every day. After going through it myself, I'd probably never do it again. The income isn't worth the stress and anxiety after your first hack. I have a greater respect for for peace of mind as a result of my experience.

Jordan Williamson · Answer

I have house hacked two duplexes now. I would highly recommend it. However, make sure you buy it as a rental and don't try and justify a property that isn't a deal just because you will be living in it. Also, It seems like you need to confirm whether you will be able to get a loan before you make this decision. If you can't get a loan then this is a moot discussion..

Jean Bolger · Answer

If you live in the duplex you will be eligible for an owner occupied loan, which means you have the option of a considerably lower downpayment ( as low as 3.5% for FHA loans, and 5% for conventional loans). A loan for a rental that you don't live in will require at very least 15%, often 20% down.

Nick Stango · Answer

@Michael Roy thanks for the reply and the offer to help me find an SE friendly lender, I'll keep that in mind when I'm ready. My wife and I are driving down to FL soon to check out the area. We are willing to rent for a little if we have to but really want to get our feet wet with an investment property of some kind soon.

Account Closed · Answer

i would hate to live next to a bad tenant!

Raymond B. · Answer

@Tameka Martin,

To make the @ work, do the following: Hold down the shift key and type @? Look below this Window, and you will see a list of names of people that have posted in this thread. Click on the name of the person that you want notified via an email, that you responded to them. If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name. Then look below this Window and click on that person's name. Raymond

Tameka Martin · Answer

@JordanWilliamson Thanks.

I am also considering buying another property as owner occupied. I currently live in a single family residence and need to rent my house. I hope to qualify for an FHA loan so I can put  down 3.5 down . My income cannot qualify me for both mortgages, so I need to rent the house. Will the lender take a year lease for proof and allow me to purchase another property.

Should I sell my house and buy a duplex?

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