Looking to add to your real estate investment portfolio? Expanding with duplex financing may be exactly what you are looking for. While there are countless options, it's worth considering how a duplex could augment your earnings as well as the best way to go about securing duplex financing.
At Rental Home Financing, we offer stated income loans with no tax returns required, competitive duplex mortgage rates, and a streamlined process that closes in two to four weeks.
What Is Considered a Duplex?
As rental property investors, it's important to understand the formal definitions of various property types.
Fortunately, duplexes are a relatively easy property type to nail down. It's any residential building that entails two separate living units with a shared wall. Keep in mind that this is not the same thing as a twin home, which is also two living units with a shared wall, but the units are owned separately. Duplexes only have one owner.
Duplex Mortgage Rates
Technically, duplexes are multifamily properties, putting them in the same category as triplexes and apartment buildings. You may hear duplexes referred to as a "2-4 unit multifamily," a double, or even an apartment. Financing them is no different.
However, depending on the reason the owner purchased a duplex, realtors can list them with any of the following designations:
- Multifamily
- Commercial
- Residential
No matter what the reason, though, duplexes are promising properties that just about every rental property investor should consider adding to their portfolio.
4 Benefits of Adding Duplex Financing to Your Portfolio
With between 35% and 40% of the population in this country currently renting, it's a great time to own residential properties. If you're looking to add to your portfolio's returns by adding properties to it, buying a duplex would be a great place to start for the following four reasons.
A Good Place to Start Scaling Up Your Holdings
The great thing about multifamily properties is how much larger their returns are. Furthermore, you can lock in those returns with just one mortgage, which is extremely helpful if you're relying on traditional lenders when you first start out.
At the same time, it generally takes a pretty large mortgage to purchase an apartment complex. That might not be something you can finance early on. Yet, a duplex will give you the benefit of two sources of income from just one property without having to put down the same amount of money to secure a mortgage. In some areas, you can easily find a duplex that would cost you as much as many of the single-family homes there.
Managing an apartment building could mean overseeing 10, 20, 30, or even many more units, as well. That can be a daunting task to someone who's new to property investment.
A Duplex Mortgage Could Mean Living without a Mortgage Payment
It's also extremely common for duplex owners to rent out one of the units and live in the other. Depending on the size of your down payment, you might be able to charge enough for rent that the monthly payment covers your entire mortgage and duplex mortgage rates.
In effect, you'll be living "rent-free." All the while, you'll also build equity you can later cash out to lock in another mortgage or take care of necessary repairs.
You're Not Lacking Finance Options with Great Duplex Mortgage Rates
Just about every town in the country will have duplexes on the market, meaning you can be completely location-independent with your search. The same can't be said for other multifamily properties. Even if you look at larger cities, it won't always be possible to find an apartment building to purchase, no matter the size.
But duplexes abound, so whether you're looking for a property near where you live, in a city where the housing market is extremely good, or where the effects of a recession would be limited, you won't lack options at all.
You Can Subsidize Vacancies with Airbnb & Vrbo
One of the best things about owning a multifamily property is that vacancies aren't as big an issue as they are when you own a single-family house. In real estate investing, cash flow is vital, and nothing kills it quicker than owning a home no one is living in. Airbnb and Vrbo as well as many other companies are begging to rent out your duplex.
So, with a duplex, even if you only have one person living in it, that could be enough to cover your mortgage. If you live in the other unit and are struggling to find another tenant, just list it on Airbnb. You'll be able to generate an income while you wait for a new tenant to come along.
The Advantages of Going to a Nonbank for Your Duplex Financing
Of course, before you can enjoy the benefits of owning one of these buildings, you need to actually secure duplex financing.
As we touched on a couple of times now, one of the best parts of owning a duplex is that you enjoy two income streams (assuming you don't live there) with only one mortgage.
Why Choose a Nontraditional Lender?
The more homes you own, the harder it is to qualify for a mortgage from traditional lenders. Fannie Mae's own lending guidelines only allow for 10 mortgages. However, that's no guarantee that a lender will be comfortable with this amount.
On the other hand, a nontraditional lender generally only cares about the property in question. It won't matter if you own 2 properties or 200. Because they can make these kinds of decisions about duplex financing on their own, nontraditional lenders can also be much more flexible about other features of the loan, too.
Do You Want Duplex Financing Right Away?
That's where we come in.
At Rental Home Financing, our specialty is property investors who are serious about building up their portfolios. Since 2014, we've successfully originated almost $500,000,000 in rental property loans. Many of these were for investors who wanted to add duplexes to their portfolios.
Despite this, our duplex financing process is about as straightforward as it gets. We don't care about your employment history, tax returns, income, or even how many properties you already own. As long as the duplex in question checks out, we can lend you the money you need within two to four weeks.
Get Started with Duplex Financing
Our company can also offer refinancing and cash-out financing. Contact us today to learn more about all the ways we can help, or call 888-375-7977 to speak with a lending specialist.