How to Buy Your First Duplex: ‘House Hacking’ for Beginners
This article was first published on NerdWallet.com.
Emily Johnson recalls her first duplex fondly — well, sort of.
She rented to a friend’s sister, who ended up being “a nightmare”: The tenant smoked in the house, paid rent late and knocked on Johnson’s door at 11 p.m. with maintenance requests.
Nevertheless, Johnson caught the investing bug. That experience 20 years ago inspired her to buy four more owner-occupied, or live-in, duplexes, which generally require smaller down payments than investment properties occupied by tenants alone. Today, she works as a real estate agent with Sotheby’s in Los Angeles, helping others buy multifamily properties — and avoid common beginner blunders.
“I made all the mistakes the first time,” Johnson says with a laugh.
On TikTok, influencers have rebranded this concept as “house hacking.” Buying an owner-occupied multifamily property has a fresh appeal to younger buyers thirsty for passive income, or just a leg up in a brutal housing market.
The typical monthly principal and interest payment on a single-family home has more than doubled in the past three years, from $1,035 in 2020 to $2,192 in Q3 2023, according to the National Association of Realtors. Suddenly, unclogging someone else’s toilet doesn’t seem so bad, so long as they’re helping pay your mortgage.
But that rental income is “not free money,” Johnson stresses. To succeed as a live-in landlord, you need a goal, a budget and good...