Investing In a Duplex As Owner-Occupied

In addition to spending lots of time thinking about multi-channel marketing automation, I have been blessed to be able to cultivate an interest in real estate investing.  As a child, I noticed that people who seemed to have it together financially tended to own real-estate.  Maybe you’ve noticed the same?

For years, I analyzed and considered the pros and cons of various real-estate investments, wrestling with the financial benefits of purchasing a single family home versus acquiring a multi-family property (duplex, triplex, or fourplex) where we occupied one house .   Eventually, this property (and any others acquired in the future), could generate cash-flow for our golden years — in addition to numerous other benefits.

Lots of spreadsheets, what-if scenarios, and prayer led us to finally decide this was the course we wanted to pursue.  So in 2011, my wife and I purchased a two unit property in Costa Mesa, CA.  We currently live in one of the houses, and rent out the other.

During the selection process (which by the way, was about 18 months), I found myself looking for (but not finding much) literature and insight from other investors considering the multi-family purchase as the first step in a long-term real-estate strategy for their family.  There’s a lot of information available about real-estate in general, but here are some things we learned during the process:

  • Know what you’re looking for.  When we started the process, we drafted a set of criteria to help us find what we felt was a good fit for us.  For example, since we intended to live in one of the houses with at least one child, we felt we needed at least 3 bedrooms and 2 bathrooms.  This particular point proved difficult in our area of the country — but we stuck it out and finally found something that had a 3/2 and 2/2.
  • Be open-minded.  During our selection process, we looked at a lot of different properties — including those that did not exactly fit our criteria.  We found this helpful to give us context for making better decisions about our target property.  For example, we were able to compare duplex and triplex properties against similarly priced single-family homes.  Having this contrast provided us with deeper insights.
  • Find the right real-estate team.  Since our investment situation and longterm strategy was a little different than looking for the perfect single family home with a white picket fence, we sought help from an agent and mortgage broker with multi-family experience.  Like any endeavor, having the right team can make all the difference.  For us, it was important to have a helpful (not pushy) set of people to rely upon.  We were fortunate to get some great referrals!

It’s been almost a year since we completed the transaction, and we’ve already learned a lot about being landlords.  Financially, what we pay ourselves in “rent” is less than what we previously paid to rent a much smaller place.  Even factoring in property taxes, we’re still paying less.  Amen!

What do you think of the strategy of acquiring a multi-family property, and living in one of the houses while you rent the other?  Have you tried this?  If not, what are your questions?

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