First Time Buyers! Newly married and considering purchasing a twin/duplex, live in one and rent the other.

Asked by Scott & Silvia, West Chester, PA Tue Jan 15, 2008

Our plan is to live there for 5-7 years, keep the mortgage on it, and rent out both sides (twin/duplex), and then purchase our dream home. Any disadvantages or advantages, will the mortgage on the twin effect our ability to purchase the next house (positively or negatively)? Also the house isn't in the most desirable area, but it's not too bad either, and there is a good rental history on it. We would like to fix it up, since we will be living there. However we don't want to price ourselves out of the rental market either. Any advice, opinions, or input would be greatly appreciated. Thanks

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Dale Archdek…, , Philadelphia, PA
Wed Jan 16, 2008
Congratulations on your marriage and your investment in your future.

I am a mortgage broker and real estate investor in Philadelphia and I would like to answer a few of your questions.

-The mortgage you obtain on this duplex will not prevent you from obtaining another mortgage down the road. Your qualification is based on your income, credit and your debt to income ratio. Lenders will look at the total amount of rent you collect on an investment property, minus 30% for expenses and the remainder is counted as income for you. So if your investment property shows an income after subtracting 30% it's counted toward your gross income, if it shows a loss after subtracting the 30% it is counted as debt. Each lender sets the acceptable number of mortgages you can have in your personal name, usually that's 10. if you have questions you can find my contact info on my website at:

- You should be concerned as to whether the duplex is currently rented or not. If it is vacant it is likely that the current owners have had difficulty keeping it rented...and you will inheret their problem. If you feel strongly that you can keep the other unit occupied, run some fake test ads on either or in a classified ad in the local paper. It will give you the opportunity to test the response and proper pricing for the unit.

-If you have no experience managing rental property or renters...I strongly recommend purchasing "Down to Earth Landlording" from author Don Beck. He is a local real estate investor and ace property manager who really knows his stuff.

Good luck to you, and remember that property management, managing renters is a business and carries with it similar risks and rewards. Prepare yourselves and it will be the best thing you have ever done.

-Dale Archdekin
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Cheryl R. Su…, , Schwenksville, PA
Tue Feb 26, 2008
I would suggest not fixing it up until you are ready to sell. I would also find out how much you can rent the home for. When was the last time it was rented. (within 6months?) What is the address. I can do a comp search of the rentals in the area. Since you can only rely on the sellers word of what is may have rented for in the past, you need something more concrete, such as can you rent for this price in this area and who can you get to rent it? Is there a college nearby? Transportation (bus stop) nearby? Section 8? These are some of the questions you can ask of the seller. You will not know for sure if you can rent it for the price you want, unless you get all the fact. If you have a realtor, have them run the rentals that have rented in the same area. Check out where these homes are and compare to this one you want to buy. That hopefully should help.
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Peggy Evans, Agent, West Chester, PA
Wed Feb 20, 2008
Congratulations! I concur with what everyone has said to you. As far as your improvements go, here is a link for you to take a look and consider the cost of your investment, the time you will be there and what your return may be. Best of everything!
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Adelina Rotar, Agent, Knoxville, TN
Tue Jan 15, 2008
Congrats! We're newlyweds as well...

I have a young couple (mid 20's) that did just what you described. They rent out the left side and are very blessed with renters that pay on time every time and are there only in the evenings. They have totally remodeled the right side where they live. The renters pay 5/8 of their mortgage (including taxes/insurance) and pay their own utilities. They bought this duplex 1.5 years ago and have since also bought a triplex and a fourplex. These are not people that have a lot of money. They are just investing in real estate the smart way..buying low, remodeling what they can on their own, renting to good people and buidling equity. Everything involves some degree of rist, but the rewards can be very great too. Check in with your CPA as well and get his/her advice.

My husband and I plan on doing some of that this year as well. Best of luck to you.
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Chris & Step…, Agent, Philadelphia, PA
Tue Jan 15, 2008
We are big believers in owning real estate. It sounds like a good plan as you build equity for those 5 to 7 years for your next house. Further, a lot can happen over that timeframe so it makes sense to participate in all the benefits owning real estate has (mortgage interest tax deduction, building equity, appreciation and so forth). Further, renting out part of your property is a beautiful way to offset your mortgage. My wife and I started buying properties ourselves a few years ago and now own 10 properties (in addition to our primary residence). We are very happy with all of our properties. We wish you luck. More info can be seen on our site at
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