Are you considering buying your first home? A duplex is an investment well worth considering. If you are single or have a small family and half a house is large enough for you, the numbers really make sense. Fortunately, in the Cleveland marketplace, there are a lot of 2 family homes for sale under $100,000 that are move-in ready.
If you believe that a large down payment or perfect credit is needed, guess again. FHA, which stands for Federal Housing Administration, has a loan available for multi-family homes that you will use as your primary residence. It only requires 3.5% down and generally a score of 640. If you are not sure what your score is, applying for a pre-qualification through a reputable bank or lender to find out would be recommended. FHA loans also allow you to have a non-occupying co-borrower, like your parents, who co-sign for you if you don't yet have enough income. If you don't want to deal with the added responsibility of being a landlord, you can hire a property management company to collect rent and find tenants. As well, you can also pay a handyman service to do any repairs. Just remember, these services will cut into your profit by 10-20%+.
Here is an example of a home for sale in Lakewood Ohio:
Lakewood Duplex Purchase price: $95,000
Down Payment: $3,325
Expected Mortgage Payment (including taxes and insurance): $944
Expected Net Rental Income**: $600
Net Mortgage payment: $344 a month!
Just imagine owning your very own home for less than a car payment per month! Another option for you is applying the $600 extra that you are making in net rent towards the balance. If done, you will have the house paid off in only 8.75 years! You can then move out and either buy another duplex or a single family home and rent out both sides so you have an extra $1,500* gross a month generated from this property alone!
Buying a home now, while prices and rates are near historic lows, just makes sense; but having someone else make most of your mortgage payment is brilliant! The next step is to call a reputable bank or lender to talk with a loan officer to learn more. A pre-qualification is generally free, and most professionals will help explain what steps to follow are, as well as how to pick a quality real estate professional once pre-qualified.
Good luck with your home buying experience.
Ryan Salo (NMLS#147309) is a Loan Officer with ENG Lending, a division of Bank of England Arkansas. He been in the industry for almost 10 years and has guided and taught hundreds of homeowners in finding the right fitting loan and maximizing their credit scores. He lives in Lakewood with his wife and 4 children. He can be reached at 440-399-1066.
*rates and fees are subject to change at any time example rate is 4.25% with APR of 4.97% For informational purposes only. The views and opinions expressed herein are those of Ryan Salo and are not endorsed by Bank of England. Not an offer to lend or extend credit. Credit subject to approval, including credit worthiness, insurability and ability to provide acceptable collateral. NMLS #418481 Member FDIC. Equal Housing Lender