7 Reasons to Live In your next Duplex, Triplex, Fourplex

Many people contemplate buying a duplex, triplex, or fourplex for their next home to live in instead of a single family home, but they often wonder what all the advantages are of doing so. To help all the wonderers out there, we listed 7 great reasons to live in your next 2-4 unit.

 

1. The loan products-

One great aspect of duplexes, triplexes and fourplexes is that they are considered residential properties in the eyes of the lender. This allows you to take advantage of residential purchase loan products including FHA loans. Purchasing a home owner-occupied typically requires less down payment, offer better interest rates, and there are generally more loan products available.

2. Tax advantages-

If you plan to occupy your 2-4 unit for at least two years and will eventually sell it thereafter, you may be eligible for a sizable tax exemption. Currently, the tax exemption states that if you’ve lived in the property for any 2 year period during the last 5 years and plan to sell, you are eligible for a capital gains tax exemption for the first $250,000 for single people & $500,000 for married couples. Many would argue that this is the greatest reason to occupy your 2-4 unit. 

In addition to this exemption, there may be other various tax advantages available to you. Please consult a CPA for a full list of tax advantages that apply to your circumstance. 

3. Keep a closer eye on your investment, and tenants–

By living in your 2-4 unit, you’re given an opportunity to observe the activity on your property and assure that the condition of your investment is maintained. Some believe that actually living on the property encourages tenants to behave more appropriately. In other instances, if you have difficult tenants, it’s easier to address this issue early on before it becomes a greater issue. Additionally, if there are any repair issues with the property, you will be the first to know. This brings me to the next reason to live in your duplex, triplex, or fourplex:

4. Repairs and maintenance are easier to address-

Every property owner fears that one day something terrible may happen with their property. For many that occupy their 2-4 units, they find peace of mind in knowing that they’re always on the premises should any issues arise. Owners that occupy their investment can essentially address every problem immediately as they occur. Also, many people on a busy schedule find it difficult to carve out time to meet with contractors and repairmen to address property issues. Scheduling is much easier to deal with when you can work around your home schedule.

5. Cashflow to offset the mortgage- 

For those who hate the idea of paying a high mortgage, renting the other units to offset the mortgage is an ideal route to take. In many instances, the rents from the other units can lead to a lower mortgage payment than the cost to rent that same unit. For others, we’ve seen the rents of the other units cover the cost of the mortgage payment entirely or even provide income.

6. Lower overall costs

Various costs can be cheaper as an owner occupant such as mortgage rates (mentioned above) insurance rates (check with your agent), utilities (by minimizing waste/abuse) and more.

Also, tying back to reason number 4, your overall repair and maintenance costs can be lower overall. Among the many maintenance costs that can be lower, here are a few:

• You can save on travel expense to the property (see reason #4)
• Property owners who normally find it cheaper to just hire handymen to deal with simple repair issues can address these minor repairs themselves.
• By living in the property, some owners find that they can manage their own properties and save management fees upwards of 10% or more plus costs.
• For major repairs, it’s easier to meet with multiple contractors to get the lowest bid or even hire tradespeople to conduct the repairs and manage them personally.

7. Versatility-

Living in a 2-4 unit property is a versatile advantage because it provides you with opportunities that you would not have as a non-owner investor. Here are a couple scenarios that illustrate this point:

• For those interested in renovating the units over time, it’s usually easiest to begin with the home you live in. It’s a great strategy to live in a unit, renovate it, rent if for higher rent, and then move in to the next unit to do the same. You can repeat this process until you have a completely renovated property. By doing so, you minimize the amount of vacancy costss that it would typically take to do a full property renovation.
• Should you decide that you no longer want to live in your duplex, triplex, or fourplex, you can easily just move out and rent the unit, but you can also retain the attractive owner-occupied loan that you acquired in the initial purchase.

In Conclusion…

Ultimately, living in your 2-4 unit investment isn’t for everyone and is a decision that you should make based on your personal circumstance. Please know that there are certainly more advantages than we’ve mentioned, but hopefully this list has helped you with your decision making. For more information and help regarding this matter including numerous reason NOT to live in your next duplex, triplex, or fourplex, please don’t hesitate to contact us. We’d love to hear from you.

 

LAWRENCE DY