Congratulations on reaching a significant milestone: buying your first home. Did you know you could buy two homes in one?

Buying a duplex means you get a home for yourself as well as a source of passive income. It’s an excellent opportunity to help fund your mortgage and help give your tenant a decent place to live. But should you buy a duplex as a first-time homeowner? Here’s how to make the right decision.

What Are the Benefits of Buying a Duplex?

All you want is a home to call your own, so why would you buy two? There are a few very good reasons to consider a duplex as your first property.

First, let’s talk about the most commonly cited wisdom. When you rent out half your home, you can put someone else’s money to work on your mortgage and build equity faster. While making your mortgage payment more manageable is great, there’s an even better reason to choose a duplex. When you build equity quickly, you put yourself on the fast-track to moving into your dream house.

Second, you will likely qualify for a larger mortgage if you intend to rent half of the space because you can count potential rental income. A duplex is an investment property, but you get the same rates and terms as you would a single-family home because you are the owner-occupant.

Finally, choosing a duplex gives you real estate and property management experience. If you have an interest in the property market, renting out your duplex allows you to get your feet wet.

What Should You Think About Before Buying Your Duplex?

The benefits of owning a duplex are real, but for some people, they won’t outweigh the cons.

Let’s talk about the elephant in the room: sharing your home with someone. While the best dual occupancy designs ensure privacy for both you and your tenant, you will ultimately live side-by-side with someone else. If you’re tired of renting, this can be a real disadvantage.

What’s more, you need to think about whether you really want to be a landlord. It costs money and takes work to rent a property. And unless you use a property management company, you need to be available 24/7 for emergencies.

Finally, buying a duplex limits your neighborhood choice and your ability to sell. Not all neighborhoods offer duplexes, and even when they do, you’ll narrow your pool of potential buyers once you decide to sell.

Would You Buy a Duplex?

Buying a duplex gives you a chance to build equity with someone else’s money as well as help you get on the path to your dream home. As a first-time buyer, these benefits are very appealing. However, you need to remember that being a landlord isn’t free money. You need to not only make yourself available to the tenant, but you will share space with them.

Are you a first-time homebuyer looking for ways to use your home as an investment? Visit our Real Estate Investment archive for more helpful content.