Home buying: Why I Recommend Buying a Duplex

Picture of large house. Text on picture: The Duplex Solution“The American dream” has consistently included both opportunity and home buying. Unfortunately, since 2008 and the housing collapse the dream turned nightmare for millions of Americans. Banks had to be forced by the federal government to offer modifications to their clients. People were “upside down,” meaning that the current value of their home was significantly less than they had paid for it, or less than they still owed on it. Is home buying for you?

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A house is generally the largest single investment the average American will make in his or her lifetime. What does having a house mean to you? Protection from the weather? A place of stability to raise your family? Does having a house mean you are a “grown up?” Does buying a house  and home ownership mean that you are now a successful person? Sometimes a house is even referred to as “an instrument of savings.” (Money Magazine, 10 Things the Financial Crisis Taught Us, Jan/Feb 2017, p 54 #ad.)

A lot of us like to have our own space. While paying high rents every month is discouraging, the reality is that paying the exact same amount of rent as a mortgage payment is not an “apple to apples” comparison. In our case, owning a house costs 15 to 20% more than renting. Why is that?

[clickToTweet tweet=”There are extra expenses because YOU live in your house! You want things to be nice so you spend extra money. Renting vs home ownership is not a direct comparison. #goalaccomplish1 #duplex https://www.goalaccomplished.com/buying-duplex/” quote=”There are extra expenses because YOU live in your house! You want things to be nice so you spend extra money. Renting vs home ownership is not a direct comparison.”]

So what makes the difference? In a house things break and YOU are responsible for fixing them AND the general maintenance. When you are living in the house, you fix things and make them nice for yourself. If you are replacing light fixtures, you tend to buy fixtures you really like (and those that cost a bit more) than the $20 contractor special light fixtures that a property manager would  buy at a home improvement store.

Home = Forced Savings

A compelling argument is presented by Anand Chokkavelu, CFA in The Motley Fool in the article Rent vs. Buy: Why Buying a House Generally Wins at TMFBomb. He says, “Each month, homeowners are automatically squirreling away the principal portion of their mortgage payment — as opposed to the renter, whose whole rent is an expense.”

Here comes the duplex to the rescue: A dwelling divided into 2 units. The homeowner can occupy one unit and have a tenant in the other unit. This situation certainly has advantages. The owner has the tax advantages of having a rental business (with those tax deductions to AGI per IRS regulations) and a nice tenant who helps him pay his mortgage expenses each month. The tenant has the flexibility of living in a town short term and the convenience of having someone else be responsible for the repairs.

Picture of family sitting around a campfire. Text says, Afford to Relax- the advantage of a Duplex.

Of course, not everyone is cut out for being a landlord, but please think about purchasing a duplex to help you pay your mortgage. As a housing counselor, I saw many clients in financially tough situations and the extra income from a duplex rental situation would have helped them so much. So when you are out looking to buy your house, ask the realtor to show you some duplexes. You will be surprised at the options out there and just maybe the duplex solution will help you get into, and afford, your American dream.

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