Is it worth it if I still pay part of the mortgage myself?
It can be. Plan on paying part, because one rent is set against the payment on the whole property. On our example the payment is $3,945, the rent covers $1,378 and you pay $2,567. Judge that against the same home with no tenant, and against your rent today.
WHAT MOST PEOPLE ARE NEVER TOLD
The comparison was never with zero. It is with the same home and no tenant, and with the rent you pay now. Paying nothing was not one of the choices.
The example is a $480,000 duplex in Texas, bought with an FHA loan. The other home rents for $1,650. After we set aside part of that rent for empty months and repairs, it covers $1,378 of the $3,945 payment.
Be more cautious and the number moves. With the other home empty a tenth of the time, and repairs at 1 percent of the price each year, your cost is $2,860.
Then the years, the slow in get rich slow. Each payment retires a little of the loan: $6,233 in year one, $81,186 over ten years. Over those ten years the rent covers $165,330 of the payments, if it never changes.
FHA asks the rents to cover the payment only on a triplex or fourplex. On a duplex it runs no such test.
GOOD TO KNOW
Your share can be more than the rent you pay now. A month with no tenant costs the whole $3,945. And nobody knows what the price will do. If you could not cover that empty month from savings, wait and save first.
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.
Free. No credit pull.
WHERE THIS COMES FROM
- Series Homes worked example: the assumptions are printed on the ten-year page
- HUD Handbook 4000.1 (FHA): II.A.1.b.iv(B)(3)(c) self-sufficiency test on three- and four-unit homes
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.