In my first blog, I introduced you to a few reasons you should consider a duplex as an option when you’re buying your first home. They are to:
- Increase your income
- Add to your real estate portfolio with your first property purchase
- Experience the potential for additional resale value
This week I’m expanding on the first reason: Increasing your income. Here I’m going to briefly discuss how you can turn your duplex into extra money…
And a couple of good ways to use that extra money to help you make even more money in the future.
How Can You Earn Additional Income From Your New Piece of Washington Real Estate?
You can obviously make money with your new duplex by renting it out monthly to tenants who may sign a lease and pay a security deposit. This is a scenario most people are accustomed to, and the technical stuff is probably better suited for a separate blog about the legal aspects of landlording (hint, hint).
You can also use the extra space in your duplex as a temporary vacation rental which typically charges by the day or week. This arrangement usually means you can make more than you would with monthly tenants, provided you can avoid vacancy.
Use Your Extra Income Wisely
Renovations, Repairs & Upgrades
It’s always a wise move to invest extra income in your new Washington real estate purchase. Increase its curb appeal, make necessary repairs or upgrade appliances, paint, flooring or fixtures. Build or replace a fence, install energy-efficient faucets and light bulbs or add an additional bathroom to increase your property value as you go.
Pay Additional Principal Each Month
Zillow estimates the average median listing price of homes in Skagit County at $299,000 (Mount Vernon real estate, included!). Assuming you opt for a standard 30-year fixed rate mortgage with an interest rate of four percent (Bankrate.com says the current average mortgage interest rate in Washington is about 3.46 percent.), and you put the standard 20 percent down (about $60k), your average mortgage payment is going to be right around $1,350 (including insurance and taxes). If you add even $500 of your potential rental income to your monthly payment – as principal – you’d pay off your duplex in 18.5 years, saving over $76,000 in interest!
*These calculations are my own, and are simply estimations based on some pretty standard spreadsheet formulas, so they most likely won’t match what your lender shows you. Math!*
This doesn’t require a lot of explanation. As a landlord – and homeowner – you need to build a substantial “Oh, Shit!” fund to cover the unexpected costs associated with owning a home and rental unit.
I hope you know more about how you can gain – and spend – extra income by choosing to buy a duplex as your first home purchase of Mount Vernon real estate. In my next two blogs, I’ll be covering how owning a duplex is a boon to your real estate portfolio and why purchasing a duplex is the best idea now to increase your potential resale value in the future. As always, the Dominic Pettruzzelli Real Estate Team is available at 360-610-7256 if you have questions about buying or selling Washington real estate.
 © Kgbo CC BY-SA 3.0, via Wikimedia Commons