Should I Buy a Duplex as an Investment?

September 25, 2019 | Posted by: Ron Chan

Should I Buy a Duplex as an Investment

So you’ve made the wise decision to invest in Winnipeg real estate. You’re also considering a live-in and income scenario, which puts a duplex on the tip of your tongue. A duplex isn’t for everyone mind you, and you’ve heard pros and cons from family, friends, and coworkers on the matter. But for many prospective buyers it’s a perfect fit. Let’s find out if a duplex mortgage is right for you.

3 Lifestyle and Investment Scenarios That Make a Full Duplex Mortgage a Great Idea

You Need a Place to Live That Also Generates Immediate Income 

Every real estate purchase is an investment, so even when you’re the one to move in you will start building equity with each mortgage payment. That said, “future value” may not be enough for your financial situation, and you may demand income today to help pay down the mortgage and/or to invest in other lucrative opportunities. This is when buying into a full duplex makes a lot of sense…and dollars. It’s pretty simple. You (and your household) can live in one side, and rent out the other to long term tenants. In the right community, the monthly rent will cover a significant portion of your mortgage and may even cover the whole thing, especially when you include furnishings and other concessions that allow you to charge a premium. You may also consider the short term rental market (Airbnb, etc.) as during peak seasons you can earn even more than long term rentals deliver.

You Run Your Own Business

Entrepreneurs can also make magic happen with a full duplex mortgage. If you’re a consultant/contractor you can use the other side as an office and write off a much bigger percentage of the mortgage when compared to write-offs attributed to a room inside of a single detached home or condominium. If you run a business that needs a brick and mortar set-up the financial prospects are even better. For one, you don’t need to find a commercial property and pay up for a lease or outright commercial mortgage. Plus, by running the business entirely on one side you can treat the entire space as business expense, especially when renovations/retrofits are made to serve customers/clients. This scenario is perfect for lawyers, physiotherapists, estheticians, Realtors, and many other types of enterprises.

Plus, because one side of the duplex is used as a place of business, you can deduct other traditional home expenses that otherwise weigh heavy on your wallet, including utilities, property maintenance, and yard work because after all, it's an income property.

You May Have Other Family Moving In One Day 

In our recent article titled Should You Buy a House With Your Parents we brought up the fact that when retired and they reach a more advanced age, they may need to move into a new space - namely one close to you. This is even more likely should some home-care be required. No matter how close your are with the folks (in-laws, even?) having them live in your house can be taxing on your relationship, but when it’s at an arm’s length the prospect is much more appealing. A duplex is perfect for this. Your parents or grandparents (or other family member that needs to be close due to health concerns) can live in the same residential building without actually sharing the same space. Since they’ve freed up retirement income from going towards their current property, it can be applied towards your mortgage, if you need it. Plus, if you qualify as a caregiver for a family member with a disability or illness, you can claim certain tax credits when you file your tax return. In this case, a portion of the full duplex mortgage may be claimed when it can be shown that they are living on the property out of health necessity.

Of course, there is another scenario here - original dependents (read: your kids). If you have children there’s a good chance that their generation will follow the Millennial trend of living with one’s parents well into their 20s or even 30s. While you may shudder at the thought, it’s a reasonable reality but a duplex is a remedy can help you prepare for that. And yes, you have our permission to change them rent! We can’t speak to them eating up all of your food though. 

If any of the above sounds about right for you, contact Winnipeg broker Ron Chan today to discuss your duplex mortgage prospects. Call 204.290.9950 for a friendly conversation.

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