What’s a Better Deal: A Duplex or a Single-Family Home?
If you’re considering buying an investment property in Silicon Valley, you might not have even considered buying a duplex – but for many people, buying a duplex ends up being a better deal than buying a single-family home. Naturally, your circumstances will dictate what’s best for you (and your mileage may vary), but you should talk to a REALTOR® if you’re trying to decide what to buy.
What’s a Better Deal: A Duplex or a Single-Family Home?
First things first: There are several advantages to buying a duplex that many investors take advantage of. One of the biggest is that you can live in one unit while renting out the other – and at that time, if you charge the right amount in rent, your renter will pay enough to cover your monthly mortgage payment. Even if the tenant only covers part of your monthly mortgage payment, your portion will be significantly lower; you can save money and invest those savings into the property or into another rental property elsewhere.
Here’s an example – and although these numbers likely won’t match your transaction, they illustrate how you may be able to make it work:
If you purchase a duplex and have a monthly mortgage payment of $4,200 per month and charge a renter $2,500 per month to live in one half of it, you’re only responsible for coming up with $1,700 to make your monthly mortgage payment. On the other side of the coin, let’s say you purchase a single-family home with a total mortgage payment of $4,200 per month. You’ll have to rent out the home for $4,200 per month to cover your mortgage payment – or you’ll have to rent it out for less and take a loss.
Related: Passive income through real estate rental properties
Doesn’t a Duplex Cost More Than a Single-Family Home?
Surprisingly, many duplexes sell at around the same price as single-family homes do. And the financing is the same, too – you can finance a duplex with a conventional mortgage (the same is true for triplexes and fourplexes, as well). That means you don’t have to jump through any special hoops, and you can get yourself into a home while generating passive income by renting out the other side.
If you’re thinking about buying a duplex, you should talk to a Silicon Valley REALTOR® who can bring up listings in your price range. That way, you can evaluate your options and make the most informed decision possible.
Related: Should you allow pets in your rental property?
Other Advantages to Buying a Duplex
Aside from the financial advantage of bringing in a tenant, duplex owners enjoy:
- Property value appreciation, particularly in areas with high numbers of rental properties and high demand for those rental properties
- A lower-cost place to live while generating passive income
- Qualifying for larger home loans if you can factor prospective rental income into your income
- Tax benefits that real estate investors use (though you’ll have to consult with a tax adviser about your specific situation)
- The ability to manage a property from nearby
Related: How do you know what investment strategy is right for you?
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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