The Cost of Owning a Duplex

[Jared Baker]

Hello BP!

I've started looking at duplexes and just can't seem to figure out how to make them work.  So I live in Wisconsin between Madison and Milwaukee.  There are some higher end towns in my area that have several duplex that are up for sale, but I don't see how anyone could make them work.

So one in particular I am looking at lists at $275,000. The highest rent in the area that I have seen is $1300. So in this situation we will assume I could get $1100. If I used an FHA loan or conventional loan there is only a $200 difference per month in mortgage payment. So we will use the conventional payment of roughly $1100 for this example(FHA loan is just under $1300). Using these numbers a person could live "rent free". But as soon as you realize that there is insurance, taxes, and maintenance that will be required suddenly your about $800 out of pocket a month. This is a relatively cheap duplex, most are up near $300,000. So are these duplexes really never going to work until the cost comes down, or is there something I am missing that would make these work? The idea is to house hack.

Any thoughts are appreciated!