I’m 23, debt-free and I’ve almost got my fully-funded emergency fund in place. I was curious about your thoughts on saving up money to buy a duplex, living on one side, and renting out the other. It would be my first home purchase, and my first rental property.
Well, the good news is your renter would be right next door. You can keep an eye on things. The bad news? Your renter would be right next door. It would be a necessity to have very clear boundaries in your relationship. Otherwise, some people will come knocking on your door at midnight expecting you to change a light bulb or something silly like that. The trick to being a good landlord, especially for a rookie, is learning how to balance being firm with people, while still being fair and kind.
Another thing to consider is the purchase of a duplex in general. The upside is you’ve got someone helping pay the bill when it’s rented. The downside is when you get ready to sell a duplex, most of the time your buyer is an investor. This means you’re dealing with a wholesale-minded buyer, and that tends to hold prices on duplexes down more than it would a comparable, traditional, single-family home. On the other hand, the cute, young couple looking to buy a perfectly-staged and freshly painted home is usually more than willing to pay full retail.
I’ve owned several duplexes in my life, but I’ve always done much better with single family homes. They’re easier to rent, they tend to stay rented more consistently and, as a rule, they appreciate faster. Just know your upsides and your downsides if you’re planning on moving into a duplex and doing this. And be very careful about your location. You’ll come out much better mentally, emotionally and financially in an area where homeowners take pride in their neighborhood!
Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including "The Total Money Makeover." "The Dave Ramsey Show" is heard by more than 14 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.