Bungalow Duplex for House Hack

[Peter Williams]

Okay, first timer here!

Just put an offer down on a duplex in my area. Listed at 1.2M, I offered 1.025M

Duplex is 2x 2bed 1bath, plus a detached garage that I'll convert to a 1bed ADU. Property has a pool.

Would need to do the FHA loan at 3.5% down. payment would be $7500/mo. I'd pull a personal loan for the ADU build, would be $500/mo. Total loans $8k/mo

If my best buddy and I live in the duplex with our wives, and rent the ADU on Airbnb, we feel like we could clear enough monthly income that we could atleast eat into our obligations to the loans by half or maybe a bit more.

Curious what y’all think, anyone done anything similar? 

Thanks so much,

Pete

[Charles Renn]

Hi @Peter Williams,

Thanks for sharing your situation and best of luck getting your offer accepted! 

All-in-all, it sounds like a good plan if you are both considering holding this property long term. However, at the moment, if you add an ADU to a duplex it will not qualify for conventional financing in the future. Again, this isn't an issue if you plan to hold the property long term. If you are planning to refinance or sell to a financed buyer in the future there could be issues since conventional lenders won't lend on a duplex with an ADU.

Just something to consider. Hope this helps!