Duplex as a startup

General Real Estate Investing
1

I’ve read suggestions in this forum to start with a duplex by renting one of the units.
In Chicago area/suburbs duplexes run for about $400-450K.
Is it possible to make it when prices are so high?

2

Probably not…especially when you need to add the costs of insurance, taxes, maintenance, management, vacancies, etc.

Go to this map:

http://www-personal.umich.edu/~mejn/election/statemapredbluelarge.png

With few exceptions, if it’s “blue”, you will probably have trouble cashflowing…you’ll have better luck in most any other “red” place…

This is generalization, of course but I think that my red/blue theory has some merit!

Keith

3

I like your theory :slight_smile:

Thanks for your feedback!

4

I started in investing by purchasing duplexes and living in one side. Cash flow on my first one is still good. I didn’t like living next to my tenant, but read “Landlording”, which is a great book that helped me understand the true nature of the landlording business.

I wouldn’t have been able to invest (at that time) had I not made the purchase. It was easy getting an FHA loan for first time buyers and I received a few hundred dollars back at closing because it was a 100% loan with seller paid closing costs.

5

Great perspective.

Also, it makes little difference if you break even or cash-flow if you are receiving the benefit of living in the property. If you are renting your primary residence for X$ per month then you are effectively “in the hole” by that $ amount. Paying someone else’s mortgage. Going in the hole by the same $ amount (off-set by tax advantages) while building equity in your own home is a very different situation.

MG