Double Your Investment With A Duplex

The biggest fear a first time home buyer will face is financing.  If you are looking into investing in your first home you may be wondering how you will make the down payment, monthly mortgage payment, pay for utilities…the list goes on.

What if we told you there was a home that you could get paid to live in?  A duplex may be the answer to your financial hurdle.  This multi-family home consists of two fully functioning units however, instead of a fence separating you and your next door neighbor, there is a wall. In this blog, we’ll let you in on the secrets of extra income, tax write offs and a lifetime investment opportunity – all from living in one side and renting out the other!


Why Live In A Duplex?

There are two types of buyers for duplex homes:  investors and owner occupants.  As a first time home buyer, you can be both. One of the smartest ways to invest in residential real estate is to become an owner occupant.

As a live-out investor, a minimum of 25 percent down is typically required to finance a duplex.  On the other hand, as both the owner and  occupant of your duplex, you can qualify for a mortgage with little to nothing down.  Rental income from tenants will also allow you to qualify for a larger mortgage.


Your Neighbor Helps Pay Your Mortgage

Rental income from the tenants living on the other side can go toward your monthly mortgage payment.  Renters increase your cash flow to help with mortgage payments, as well as play a part in increasing the home’s equity and property value through natural appreciation.

Duplex Tax Shelter

Shelter Has A New Meaning

A duplex is a great tax shelter. While you are enjoying extra income from your monthly collected rent, you will show a paper loss when depreciation of your property is figured in.  This will directly reduce your taxable income.

Even though your monthly mortgage payment is good to go, there are still costs associated with managing a rental property.  You may be able to write off money spent on management, advertising, repairs and utilities. Consult your CPA to find out which of these costs are tax deductible

When it comes to property tax, your half of the duplex differs slightly from a single family home.  Due to there being only one tax credit per property, you may only deduct your half of the home for property tax and mortgage interest.


Sharing Your Space

If you don’t mind sharing your walls, a duplex can provide you with more value for your dollar.  When investing in a duplex, it is important to respect communal property.  The yard, driveway and porch will be shared.  Utility bills may also need to be split.

Being a landlord is similar to a part-time job.  Proper procedures and rental agreements must be drawn up before renting to a tenant.  If you are relying on rental checks to afford your monthly mortgage payment, you may find yourself in trouble when the rent doesn’t come on time or when you are in between tenants. We recommend screening your renter’s credit and rent history to ensure they are good long-term tenants.  To protect yourself from falling behind on mortgage payments due to circumstances out of your control, require a deposit of first and last month’s rent.  These funds can be used in the case of late payments or to fix damages after a tenant moves out.

Once you decide to move on to a single family detached home, you have the option to keep the duplex as an investment.  A duplex is an attractive rental option for people from all walks of life.  Rent your property to another family member, a student living away from home, a retired couple, a single parent, or a grown child looking after an elderly parent.


Finding Your Duplex in Portland, Oregon

In the Portland area, duplexes are moderately affordable and easy to find depending on their location, size and upkeep.  You can look for duplexes online using websites such as Zillow, Redfin and Trulia. Just search “multi-family homes”, pick your price point and see what’s available. Can’t find what you’re looking for online? Options Financial has great relationships with realtors in the Portland metro area who can help you find the property you are looking for.

While you search for your duplex, we’d love to talk with you about your loan options.  Similar to single-family homes, FHA, and VA loans are an option if you plan on living in one of the units.  Conventional loans are also available with a higher down payment.


You.  Your Home.  Your Options. Start your home buying journey with Options Financial Residential Mortgage and experience The Power Of Knowing.



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