How to Generate Passive Income by Buying a Duplex
If you’re like many people, you know how important it is to generate passive income – even people who work two jobs are struggling to get by, so starting out as a real estate investor may make sense to you. This guide explains how to generate passive income by buying a duplex in Silicon Valley.
How to Generate Passive Income by Buying a Duplex
When you own a duplex, you have two opportunities to bring in rent payments. The rent you collect from both units may be able to cover your mortgage payments and the utilities you offer your tenants – and you may even have money left over, which you can save for improvements and repairs (or other pursuits).
Even if one unit is empty, you may still have a tenant in the other. That helps cover your mortgage payment and may hold you over until you can bring in more income with a new tenant.
Pro Tip: You don’t have to employ a property manager, though doing so may make your life a lot easier. A property manager will find and vet tenants, collect rent, handle repair and maintenance requests, create and maintain leases, and hold security deposit funds. They may handle other services, as well. Check out 5 essential tips for managing your own property for more information.
The Secret to Generating Enough Extra Income by Buying a Duplex
Buying a duplex is a great way to start building passive income – and there’s one secret that can make it even more worthwhile: Living in one side and renting out the other can help you stash away cash to live on, make more investments or even retire.
Generally, you can use the income from one unit to offset your living expenses. Many investors start out this way; it’s the simplest way to get your mortgage payment covered while you continue to work and bring in income that you can use to upgrade and maintain the property. When you’re ready, you can move out of the property (or stay there, if you’d like – it’s your property), invest in another property, or even “trade up” through a 1031 exchange.
Related: Common questions about 1031 exchanges
Another major pro of living in one side of a duplex while renting out the other is that you get the opportunity to learn how to manage and maintain investment properties without having to juggle multiple units. You can use the experience you gain to show future lenders that you know what you’re doing (and that you know how to turn a profit) if you’re interested in growing your real estate investment portfolio.
Related: What is rent control in California?
If you don’t want to rent out one side all the time, you can consider renting out as a temporary place. Furnished temporary rentals tend to fill up quickly, and if you’re in an area that’s amenable to it, you may even consider renting your space out as an Airbnb for short-term engagements.
How Do You Get Financing to Earn Passive Income Through Buying a Duplex?
Financing on a duplex is a lot like financing on a single-family home. (In fact, so is financing for a triplex or fourplex.) Your multifamily REALTOR® can help you find a local lender that may be a good fit for you.
Related: What to know about multifamily loans
Are You Buying or Selling a Duplex, Triplex or Fourplex in Silicon Valley?
If you’re selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Call today or fill out the form below to find out about our innovative marketing plans that can put your investment property in front of all the right buyers.
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