A Duplex in Minneapolis [First Investment Property Example for 2017-2018]
An Example of a First Investment
A duplex is an amazing option for people to purchase as either their first home or as their first investment property. In some cases, duplexes can be both all in one.
Want to keep your expenses low or produce income?
A duplex, triplex, or quad in the Minneapolis area can create some mind-boggling opportunities.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”3325″ img_size=”large”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]If you’re in your 20’s or 30’s, you have an amazing opportunity to build a real estate portfolio that can produce massive wealth.
The key is that you need to save up, get strategic, and execute.
Here’s one example of how a young couple might get started.
- Married couple in their late 20’s
- No kids
- Combined income – $110,000
- Saved Cash – $30,000
- Work and live in Minneapolis
- Currently renting for $1,500/Month
- Want to start building a real estate portfolio
Here’s how this works:
This couple is going to use an FHA loan to purchase a $300,000 duplex. They have their eyes on two different properties, and they’re fairly certain that the duplex would get rented out for about $1,200 a month on either side.
Their plan is to buy it and live in the other side as an owner-occupant.
- Property: $300,000
- Down Payment: 3.5% or $10,500
- Closing Costs: $3,000
- Realtor Commission – Rolled into Loan
- Ending Loan Amount: $300,000, 30 year at 4%
Their mortgage payment is based on a 30 year FHA, and it’s about $1,430. After PITI, the total is about $2,000.
They find a small family to move into the other unit, paying $1,200 a month in rent.
This means they just went from spending $1,500 a month in rent to paying about $800, and now they’re building equity and some potential big-time wealth-building opportunities.
So far, they’ve invested $23,100. $10,500 for a down payment, $3,000 in closing costs, and $9,600 for the first years to cover the rest of the mortgage PITI.
This duplex is part of their plan to build massive wealth, and they are committed to taking their rent savings and building up a bigger down payment for their next property that they want to buy in a couple of years.
The couple takes the $700 a month that they’re saving and starts sacking it away with an additional $300. They are now saving $12,000 a year so that they can invest in a new property after a couple of years.
After living in the duplex for about 5 years, they’ve built up savings of $60,000, and they are going to be purchasing another $300,000 property, this time renting both sides out.
This is the beginning of them being able to purchase properties that will hopefully appreciate over time and then produce great income once the mortgage is paid off.
Getting into an owner-occupied duplex can create financial margin so that you can save money to make future investments. As your equity grows and the mortgages eventually get paid off, these investments can become annuities for you and your family – paying out tax-advantaged passive income.
Remember that you’ll be able to take your total income and then deduct your mortgage interest, expenses, and then the depreciation of the building. This means that you’ll pay tax on only a portion of the income that comes in.
We love what a duplex can do for people – if you’re interested in investigating the power of a duplex, then contact us – either Drew or Jason – through this website. We’ll be sure to connect with you.