Looking to buy first home, thinking about a duplex.

[Peter Cipparulo]

Hi everyone,

My wife and I are looking to purchase our own home and looking into real estate investment. I'll be to first to admit I have a lot more learning to do on this topic, but would like to make moves. We are looking to purchase our own home, but we were thinking about purchasing a duplex to live on one side, and to rent out the other. Could this potentially be a good investment? My wife and I both work full time jobs and would be able to afford the mortgage if we have no renter. My wife also has a student loan, would it be a good idea to consolidate that loan into the duplex?

Should we create an LLC first before purchasing the duplex just in case the renter gets hurt and wants to sue?

Thank you all!

[Trevor Ewen]

@Peter Cipparulo 

Welcome!

I think many folks on here would recommend buying more units than less. Many people I know in New Jersey choose the option to get the biggest house they can afford. My theory: instead, buy the most units you can afford, then you get the income.

It seems like you are making conservative moves in regard to the purchase, given that you could afford the mortgage in the case of a downturn. From my understanding, Edison is a nice place to live, and I imagine it would not be too hard to find a renter.

I would purchase the duplex, personally... because it makes the process easier, and opens you up to financing made for owner occupants (FHA, First Time Buyer Credits). If you are very concerned about the liability, you can make an LLC to manage the property. This LLC will make repairs and collect rent from the tenant. However, New Jersey has a minimum $150.00 charge per member (yearly) if there are 2 or more members in an LLC. Maybe this is negligible for the peace of mind, but when evaluating the income potential of a property, it should be taken into account.

Good luck, reach out should you need anything.