Duplexes - One Of The Greatest Investments You Are Able To Make

When it comes to real estate investing, the majority of people will gravitate towards a single family home. But did you know that buying a duplex or a tri-plex is a better investment? Let us look at the three main items in real estate investing. Cash flow, Appreciating and Value.
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As anybody knows in property, the goal is for positive cash flow; otherwise you have an investment which costs you money on monthly basis. Positive cash flow is only defined as money left over after paying for your mortgage, property taxes, insurance, and any monthly utilities and repairs.

A home is a money pit that can cost you money in the method of their mortgage principal, interest, insurance and taxes. Add to this regular repairs and maintenance and after everything is said and done, the only investment value a home really offers is appreciation and that is speculative based on your geographical area. Not many markets have rising values all of the time and property values could be effected by plant closings, layoffs, etc.. For many practical purposes, a residential property, a "home" doesn't fall in accordance with the genuine spirit of real estate investment, which is real estate the will cause income-producing "positive" cash flow. Indeed, single family residential home used as a home has the opposite effect and causes outgoing money flow. . .thus, the "money pit".

The smartest way to invest in residential property and still generate some kind of "positive cash flow" would be to purchase a duplex, live in one side and let the other. Many times the rent income coming in from another side can practically cover the mortgage payment of the full property supplying nearly free housing to the owner. The tenants on the opposite side aren't merely paying your mortgage, but they are helping you build equity in your own property. This equity will also grow over time with appreciation, supplying two sources of wealth building: one from cash flow pay-down of the mortgage and another, property value growth during natural appreciation.

The money you would usually spend on a single family residential mortgage payment (PITI) may be saved, in whole or in part, as a deposit for the next duplex during the time you live in your property.

The name of the game is to buy a duplex, live in half, rent the other half out and save for another duplex. When you have enough money, move out of the duplex, then rent the unit and continue to the next duplex and repeat the procedure by renting the other half out. This way you could have 3 sources of earnings working for you: income from unit A and B in the first duplex and earnings from unit B at the next. Now you've got property working for you and you're on your way to acute income generating cash flow.

The only downside to this job is you will have to live beside your renter for a period of time. The upstroke is it provides you a taste of property management without burning more than you can reasonably weigh. Indeed, this notion is the way many property concessions are birthed.

Not lots of people think about this angle when they are looking for a house and it is worth careful consideration and serious consideration. You have two choices: The money pit or income generating property. It is a choice you'll need to make.

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