Paying your mortgage by owning a duplex

Stretching Your Dollar
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INDIANAPOLIS —  There is one tip that can benefit thousands of Hoosiers: have a place to live and stretch your dollar at the same time. 

It’s not a difficult process to buy a duplex. You can live in one side and rent out the other as an investment.

“This duplex sold just about a month ago and it went quick.  It’s great because you can have a place to live and make money that most don’t consider,” said Todd Byczek with Chris Schulhof Real Estate Team.

Depending on the duplex, living on one side of the home and then having the other side leased can pay for your mortgage, which is what happened for a client of Byczek’s.

“She bought this duplex in South Broad Ripple after one day on the market, and for a good price.  It went for the list price of $119,000,” said Byczek

The investor’s entire mortgage is being paid for by renting the other side. The side the duplex owner has still needs some minor fixes before she moves in. 

Before you attempt to buy a duplex, don’t expect to have little things fixed by the seller as you often would with a house.  That’s because a duplex goes fast and there’s generally not much room or time to negotiate fixes.

Here’s another heads up: with a typical home you can put down 3% when you get a loan. With a duplex, the bank may want 15%.

“That’s because it’s an investment property.  There’s a little more risk for a lender because what if you don’t rent the other side out? There’s the possibility where you’re going to have those carrying costs, ” said Byczek.  

If that’s the case, it could make it difficult to make a payment to the bank and that’s a reason they want more equity in the home upfront.  You can search for properties yourself, or better yet, use a professional, given all the information they have.

“Make them work, make them look for something for you.  Build a relationship with a broker or agent so when something hits the market and you have your funds, you can make that purchase,” said Byczek.

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