Is Duplex Investing in Calgary the right real estate investment for you?
Have you ever considered owning a duplex? What about living in one side of your duplex and renting out the other side? Duplex investing is a great way to leverage your investment with relatively low risk. You control the property, and you pick your tenant/neighbour. Leverage allows you to live in a $300 to $400,000 dollar property while enjoying the owner equity appreciation of double that. Most lenders will add the rent you receive to your income to be able to qualify for a mortgage.
Leverage in real estate is easily explained as you put up 20 cents, and the bank puts up 80 cents to create a dollar to invest. Without leverage, you have 20 cents to invest. The bank, in return, only wants simple interest on their 80 cents. They ask for no share on the increase over time of the value of the property you bought.
When you buy a single-family home for $400,000, that is the starting size of your investment. If it goes up 10%, then you gain $40,000 in equity. Living in one side of a duplex while renting the other side has the potential to double what a single-family home would have brought you. That is Real Estate Leverage at work.
If you are serious about starting your real estate portfolio, a duplex as your primary Calgary residence and rental property is a proven strategy.
Talk to your mortgage agent about duplex financing. I can help you with buyer due diligence that you must do to keep the risk of owning down and increasing the potential return on your investment.
Here is a duplex that was just listed and how I start the process. My spreadsheet gives me a starting point to decide to dig deeper or pass quickly.
Will the current rent cover the mortgage? How much is 20% down? Can I raise the rent? Can I buy it at a lower price? What other options might increase income and lower expenses?
This is just the starting point we use to help our clients consider investing in Calgary Duplexes.