The Argument for Renting
Advocates for home ownership say that paying rent is the equivalent to throwing your money down the drain. They'll tell you that when you rent, you're not investing into anything and you're certainly not working towards paying anything off.
However, what this crowd neglects to warn you about is the responsibility that comes along with being a homeowner and how costly that is. In an apartment, a leaky sink is worth one call to management. As a homeowner, that call goes to a plumber or ends up on your plate. Either way, it's a costly expense.
Homeowners are also responsible for general upkeep on their property. They must shovel in the winter and mow in the summer. The financial impact of either is relatively small, but in a way, living in an apartment is almost like paying NOT to have this sometimes annoying responsibility.
It should also be noted that renting is typically the better option for relatively short-term scenarios. The cost of closing on a home is expensive enough that it makes the return on renting better than the return on buying (assuming that the money saved by the renter is being invested into something offering a return.) So for those who are looking to own a starter home and live in it for just 1, 2, or 3 years - skipping it and renting instead might be the better choice.
But the real meat of the argument is in this -
Signing a lease is a fiscally responsible move in many ways. Unlike owning a home, renters with a lease can rest assured in what their apartment (or home) will cost them each month. Their expenses are consistent and have few variables.
The Argument for Buying
So renting can offer consistency and security. Then why buy?
Most people will point you towards your monthly payment, reminding you that a mortgage payment goes towards paying something off while rent is an expense that will never disappear.
We can absolutely agree with the argument about building up equity, but the fact of the matter is that an even better reason to buy a home is in the potential for appreciation as it relates to equity building.
Without appreciation, the argument for "paying something off" is a little weak. Most people pay towards their mortgages for 15 or 30 years. It's only after you've completely paid off your home that this argument carries any weight. If you end up moving around a few times like most people do, you may not reach the end of a mortgage term for quite awhile.
But thankfully, that's not the only benefit to home ownership. Appreciation could allow you to walk away from your home with massive amounts of equity that you didn't even have to pay in, and that's something renting simply doesn't offer.
You'll have the opportunity to capitalize on a hot market by selling instead of being punished by higher rental rates. In extreme cases where appreciation is high (think 5% plus), you might even be better off owning a home than living somewhere for free!
Of course, the non-financial benefits of homeownership can be defined by the word "freedom" and that's what most people really desire when buying. Besides the government, no one can tell you what to do or not do with your home. You can paint it freely, have pets, remodel, and do essentially anything you'd like.
How Duplexes Change the Game
So both renting and buying have their merits, but how do duplexes fit in with all of this?
By the most basic definition, they give you the chance to enjoy many of the benefits of homeownership without many of the risks and expenses.
What do we mean by that?
As a duplex owner, you will still have a mortgage payment and the responsibility to pay for repairs, maintenance, and utilities.
But in a duplex, there are two units. If you live in one side and rent out the other, you’re often to collect so much rental income from the other side that it completely covers your mortgage!
Meanwhile, you’ll be living for just the cost of repairs, utilities, and miscellaneous expenses. As you use rental income to pay towards your mortgage, you’ll also be enjoying the benefit of building equity with essentially no cost to you.
Of course, there’s a lot more to understand about duplexes than just that, but that’s why we’re here! Feel free to reach out any time for a no-hassle consultation!