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I am wondering if there are any duplex owners satisfied with their investment. My husband and I have considered buying a duplex to rent out, with the help of a management company. I've heard horror stories of bad renters, but in reality, is it worth it? If you rented each unit out for $1000, can we expect worthy profit? Expenses would of course include insurance, property tax and repairs. Any advice?
There is no way to know if you will make a profit without knowing all of the financials, what condition the duplex is in when you buy it, and how carefully you screen tenants to control damage.
I am wondering if there are any duplex owners satisfied with their investment. My husband and I have considered buying a duplex to rent out, with the help of a management company. I've heard horror stories of bad renters, but in reality, is it worth it? If you rented each unit out for $1000, can we expect worthy profit? Expenses would of course include insurance, property tax and repairs. Any advice?
No one can tell you if $1000 per unit would yield a "worthy profit." What would your monthly expenses be? Including mortgage, management costs, upkeep, insurance, tenant turnover and screening, capex fund, etc? A $50,000 duplex taking in $2k in rental income per month might be a great profit center (might!!), whereas a $750K duplex with $2k in rents would almost certainly be a terrible monthly loss.
Ok, then, profit issue aside, I'll ask current or past duplex owners, did they regret buying the property based on rental issues or was owning a rental property a satisfactory decision? I've heard plenty of stories of bad situations, but I want to know if anyone has actually had positive experiences.
Is there something special about duplexes for your discussion? A duplex, in my opinion, is just 2 single-family homes that share a wall (although hopefully not sharing AC/power/water/etc.)
Duplexes are harder to rent and bring less rent than a free standing house. They are much easier to rent and bring more rent than an apartment in an apartment building.
Being a landlord is not much fun. No one can tell you whether or not the nice rent checks arriving every month will make it worth your time and effort to deal with tenant issues, repairs, damage, vacancies. No one can tell you whether you are suited to it and whether you can screen carefully or will get burned because you went with "a good feeling" you had about an applicant.
No one has seen the neighborhood where that duplex is located. If it is a beautiful neighborhood in an excellent location, you can get good tenants (if you screen correctly). If it is a run down neighborhood with blocks full of duplexes, each of which has 5-6 cars parked on the lawn, no decent person will consent to live in that neighborhood, so you will get either poor quality tenants, poor quality Section 8 tenants, or illegal immigrants and your landlord career won't be any fun.
My second purchase was a duplex... actually a 3 bedroom home with a 1 bedroom cottage in back all done with permits in the 1950's...
I lived in the cottage and the rent from the home quickly covered all my expenses and provided significant write-offs....
A triplex was my next purchase... a home on a corner lot with a upstairs/downstairs duplex built in the "Backyard" facing the other street... really well done as the home was totally separate and on another street and all residential with me having the only units.
Later got a 4-plex and did not like it nearly as well... too apartment like for not being a big apartment building... shared common entrance, shared laundry, house water meter, house electric.
Here is what I look for in duplex and triplexes
No shared utilities... each unit metered for gas, electric and water
Always in a residential neighborhood giving the feel similar to a single family.
No shared entrances so tenants do not have to interact.
Simple to get an owner occupied if you live in one of the units... great way to get into real estate.
Later I got into larger buildings with resident managers... really makes sense, but not economical with small plex property.
There is a book called "Landlording" By Leigh Robinson I highly recommend for those starting out... it discusses the philosophy of being a Landlord...
I've met Leigh several times and was saddened to learn he recently passed away.
It helps no end if you are able to make simple repairs... I've seen owners that have had to hire everything out and lost their shirt.
One more advantage to a duplex over a single family is if one unit is vacant... you are still 50% occupied.
Just curious, are these from people you know who are landlords and took the time to learn the landlord tenant laws, how to screen etc or just the usual talk from a friend of a friend.
Quote:
Originally Posted by Destiny74
I've heard plenty of stories of bad situations, but I want to know if anyone has actually had positive experiences.
My second purchase was a duplex... actually a 3 bedroom home with a 1 bedroom cottage in back all done with permits in the 1950's...
I lived in the cottage and the rent from the home quickly covered all my expenses and provided significant write-offs....
A triplex was my next purchase... a home on a corner lot with a upstairs/downstairs duplex built in the "Backyard" facing the other street... really well done as the home was totally separate and on another street and all residential with me having the only units.
Later got a 4-plex and did not like it nearly as well... too apartment like for not being a big apartment building... shared common entrance, shared laundry, house water meter, house electric.
Here is what I look for in duplex and triplexes
No shared utilities... each unit metered for gas, electric and water
Always in a residential neighborhood giving the feel similar to a single family.
No shared entrances so tenants do not have to interact.
Simple to get an owner occupied if you live in one of the units... great way to get into real estate.
Later I got into larger buildings with resident managers... really makes sense, but not economical with small plex property.
There is a book called "Landlording" By Leigh Robinson I highly recommend for those starting out... it discusses the philosophy of being a Landlord...
I've met Leigh several times and was saddened to learn he recently passed away.
It helps no end if you are able to make simple repairs... I've seen owners that have had to hire everything out and lost their shirt.
One more advantage to a duplex over a single family is if one unit is vacant... you are still 50% occupied.
That is exactly why I plan to buy an investment duplex in the next few years. It significantly minimizes risk when the carrying costs of both units are covered by the rental income on one. Of course the same thing can be achieved by two separate single-family dwellings, but that means two mortgages and two yards to mow and two sidewalks to shovel and two roofs to fail...etc.
Rentals have been very good to me... have some tenants going back to the 1980's...
I learned early on that turnovers cost money and no matter what anyone says... you never know how good a tenant is until after they move... so each new tenancy is a roll of the dice.
Where new owners get into lots of trouble here is not knowing all the applicable laws and codes that apply... most of my units are now in rent controlled jurisdictions so even more to know plus Just Cause eviction law... sitting in or joining a local apartment association can be very worthwhile.
Treat good tenants like gold... you need them as much as they need you.
If the situation turns bad... quickly get them out.
All my tenants know the rent must be paid on time without fuss...
I keep meeting mom and pop owners that have tenants months behind... after a few weeks it's on them for letting it happen and no one ever feels sorry of a landlord!
I have some units in other states which is a mixed bag... requires property management... prefer to have units no more than 45 minutes away and always in residential neighborhoods unless large apartment buildings.
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