It is a great way to start off building wealth! If your first home is a duplex you will qualify for first time home buyer and you can pay 3 and 1/2 percent down! After living in it for some years you can buy your second home to live in and you would only need 5% down. This is a strategy used by many wealthy people but anyone can follow this method. With the uncertainty of the housing markets and rent on the rise it would be a good idea to purchase a duplex. This will allow you to live somewhere for a fraction of the cost due to rental income potential. Some have even manage to live rent free and only be responsible for utilities and taxes. There are also tax advantages to buying a property especially a duplex.
If there are no duplexes where you live find a single family home and turn it into a duplex. Most of the time, it is feasible to do this to your own home, and it is often a good idea to buy a home and convert it. There’s no way to know for sure, however, until you’ve asked yourself the right questions about the property you want to convert.
We’ve put this together this list of questions to help you decide if converting a current single-family into a two-family home is worth what you put into it for any particular house.
This is an important question to ask yourself. In many places, the amount of time and money it takes to turn a single-family home into a two-family one, simply may not be worth it. If you’re going this route, please read this article all the way to the end. You’ll need to consider everything talked about here.
Converting your current home into a two-family residence may seem more economical to you. Often, it is. You’ve already gone through the closing process and have put your time and money into making sure your home is livable and up to par. That’s time and money you won’t have to spend up-front like you would with a new home.
Regardless if which route you pursue, you’ll need to know more about things like zoning, building department and other municipal requirements, and financing.
Am I Zoned for a Two-Family Structure?
First, check your zoning. Some places won’t differentiate; many will. If you are not zoned for a two-family dwelling, you will need to see if you can change your zoning.
In most cases, you’ll visit the municipal building dept to find out more about rezoning. If the town the property is located in doesn’t specifically have a building department, check with city hall to see who you will need to talk to.
Once you talk to the right people, tell them what you want to do with the home. They will let you know if the property is properly zoned for that. If it isn’t, you can ask what it would take to get it re-zoned.
What will it take to get your property (or a property you’re looking at) re-zoned? That all depends on the municipality in which you live. If you live in Possum Grape, AR, it may not take more than filling out a couple of forms. If you live on Long Island, the process could be prohibitively expensive, or just too much trouble.
Some municipalities will require you to make the house suitable before they rezone it; others might rezone on a temporary basis, then make that zoning permanent if you make the required changes in time. In either case, however, you’ll need to apply for the proper permits. And you’ll definitely need to make changes to the house.
What are The Requirements for a Two Family Residence?
There are some general requirements you can almost always expect no matter where you live. While there will undoubtedly be some differences depending on your state, municipality, or county, you can typically count on the following:
You will need to make sure each residence has at least one door leading outside; you may need two in some areas. Each unit will need a bedroom, a bathroom, and a kitchen or kitchen area. Shared showers normally are only legal for large apartment complexes and similar properties. You will likely need separate water, electricity, and (if applicable) gas meter for each unit. Fire codes and other safety codes may be different for a two family home than for one family. Your local building department should tell you what you need to know about this.
In most cases, you are not legally required to. But if you want to take out a loan to make renovations, you will, of course, need to let your bank know. This is easier in some areas than others. Why?
In some areas, a single-family home’s market value actually goes down once it’s considered a two family home. This could be because the bank sees a single owner as a safer investment; it could be for reasons particular to the area.
If your bank sees this as a bad move, they may not loan you the money to renovate the house. In that case, you’ll need to look at other banks or other financial solutions.
Then again, they might be happy to do so if that increases the home’s value. You may need to take out a simple home improvement loan, a business loan, or even a second mortgage. The loan officer at your lending institution should be able to run you through the options.
Turning a single family home into a two-family home can help your monthly mortgage payments significantly. If you’re buying a new property for that purpose, it is often (but not always) a profitable idea. Ask yourself the questions above to get a good idea of how it will work for you.
Keeping your monthly expenses down will allow you to live off a lot less and then you can work on multiple streams of passive income to take care of your monthly bills. Once this happens you will finally be FREE!