A duplex, a house, or keep renting: how do I compare the three?
Compare three things: what you pay each month, the cash it takes to start, and what you give up. In our example the duplex costs less each month than a house at the same price. It can still cost more than renting, and it comes with a job.
WHAT MOST PEOPLE ARE NEVER TOLD
Owning the duplex can cost more each month than renting a home like it. What the extra buys is a loan that shrinks on schedule, and whatever the price does, which nobody knows.
Take one price, $480,000 in Texas, and one FHA loan.
- The house. The payment is $3,945 and no rent offsets it. Cash to buy: $28,800. The whole home is yours.
- The duplex. Same payment, same cash. Rent from the other home covers $1,378 after set-asides, so you pay $2,567. You live in one home, and you are the landlord for the other.
- Renting. You pay your rent. No cash goes in, and you can leave when the lease ends. Nothing gets paid off.
Now put $2,567 beside your rent today. If your rent is lower, the duplex costs you more each month. That is the price of owning it.
Then the test. A month with no rent costs the whole $3,945. If you cannot carry that month, the comparison is settled for now: keep renting and save.
GOOD TO KNOW
Get rich slow means the duplex can only come out ahead over years, and only if you can live beside your tenant. If you may move within two or three years, renting likely costs less. If you want no landlord work, your choice is the house or renting.
Yours is a little different. They all are.
Tell us what you are looking at and what you are trying to do. We answer with the numbers on your situation.
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WHERE THIS COMES FROM
Researched and written by Series Homes. Checked against its sources on . Lending rules change. This page is general information, not a loan offer or legal or tax advice.