Duplexes are a beneficial choice for real estate investors who are just getting started. The properties offer two units, and the investor can live in one unit while renting out the other. The property design determines if there are any communal spaces for tenants. Buying and renting a duplex could prove lucrative for the investor.
Securing Financing for the Multi-Family Property
If the investor plans on living in the property, they could qualify for an FHA mortgage. The mortgage is available with a credit score as low as 500, but any credit score that is below 580 leads to a larger down payment and higher interest rates. The greatest advantage of the FHA mortgage is the lower-than-average down payment, but the consumer must have a credit score of 700 to get the reduced down payment of 3.5%.
Evaluating the Property for Potential Hazards
When reviewing properties, the buyer must evaluate the properties for potential hazards. If the property has any major hazards that lead to extensive upfront costs, it’s not the best choice for the investment. Renting out the duplex requires the property owner to eliminate hazards that could lead to personal injuries or major issues for the tenant or the landlord. If the investor wants the property, they should make a list of all hazards to prevent themselves from becoming the defendant in a lawsuit later. Mitigating hazards early on keeps the property safer and prevents financial losses for the owner.
Getting Proper Insurance Coverage for the Duplex
Getting proper insurance coverage for the duplex protects the owner’s and the lender’s investment. A homeowner’s insurance policy is required for all properties that are financed by a mortgage. If the property is in a flood zone, the owner must purchase flood coverage.
Renting out the property requires the owner to purchase landlord’s insurance to mitigate liabilities. It is recommended that all rental property owners include a clause in the lease that requires renter’s insurance. The coverage provides funds for repairs if the tenant causes any property damage. The policy also covers pet-related damage if the pet is listed in the policy. Rental property investors can contact NRIA today for more details about insurance requirements that protect their property more fully.
Advertising the Property to Tenants
The property owner must advertise the property when they are ready to rent out the other unit. They can advertise the property on social media or their personal website. Online advertising is cost-effective, and it gives the property owner access to a wider audience.
Ways to Maximize Profits
The rental property owner could maximize their profits by renting out the other unit to more than one tenant. For example, if the property is in a college town, the owner could rent out the unit to several college students at once.
A duplex is a terrific investment for an individual who wants to get started with real estate investments. They can purchase the property and live in one of the units while renting out the other. This choice allows them to qualify for an FHA mortgage. Investors can learn more about buying a duplex by contacting real estate advisors now.