owner-occupied duplex (foreclosures, renters, condo)

[IUgrad08]

Hi everyone,

My wife and I are considering buying a duplex. We plan to live in one side and rent out the other. We both have pretty steep college loans, so we are hoping we can effectively cancel out our mortgage payment and use the extra money to get out of debt before we start a family.

We are primarily looking around Broad Ripple because it seems to be the strongest rental market in the city outside downtown, and because we'd likely have renters that are like us: either single or newly married 20-somethings with no kids. I'd love to buy downtown, but we are priced out of downtown for the most part and there really aren't that many duplexes downtown anyway. How about the near-northside, like Herron Morton Place or Fall Creek Place? I've heard mixed things about those neighborhoods...

My questions are: has anyone done this? Was it successful? What are the broad trends in the rental market around here? I know the national rental market has been good recently due to all the foreclosures, but I've also heard Indy's rental market is soft.

I appreciate everyone's input. Thanks!

[hconstan]

there used to be a lot of duplexes around Homeplace, 111th & College area. not sure if that's where you'd like to be though? its a bit further north than the places you mentioned. yeah, Broadripple would probably be a good bet with the college atmosphere there.

[sweetana3]

My friend did a lot of research to find a one bedroom downtown with some original fixtures. She, and a lot of her friends, want to live downtown or in BR. Hardest for her was finding a place due to poor or limited advertising.

However, the price and maintenance costs of BR and downtown may cancel much of your anticipated savings.

[DrEarth]

I would never rent a duplex with the owner on the other side, unless the rent was cheap.

[IUgrad08]

Originally Posted by DrEarth

I would never rent a duplex with the owner on the other side, unless the rent was cheap.

Why?

[hconstan]

i can sort of see why. you'd feel like you were constantly under their eye. i have 2 kids under 5, and i do think i'd be worrying constantly about their noise, screaming, fiddling with blinds, you name it, in the presence of the landlords. if i were a college kid i would worry about bringing my signif. other over (esp. if they were planning to stay over) or i'd feel like i couldn't have a party if i wanted...

well anyway good luck!

[Naptowner]

Yeah, I wouldn't want to live that close to my landlord.

I know this sounds like a great idea, but you should know the pickings can be very slim and pricey for duplexes in good shape in a desirable area, and the cost is high enough that it's extremely unlikely you could cover the mortgage just with the rent from the other side, although it could certainly help. And you can't refuse to rent to someone because they have children. If you find the right property at the right price, go for it, but the problem is that rents usually aren't going to be high enough to justify it.

Pros:
reduced mortgage payment

Cons:
you live in a duplex
you are a landlord
property taxes are higher
you have to fix things quickly when they break (furnace, water heater, etc.)
20 something tenants with no kids aren't the most reliable in terms of paying rent
you have a combination of residence and investment property that affects your tax and credit/loan status (can make financing difficult)
if you buy something affordable now, you may outgrow it in a few years and have a hard time financing a second home

[mobyhead]

Originally Posted by Naptowner

Yeah, I wouldn't want to live that close to my landlord.

I know this sounds like a great idea, but you should know the pickings can be very slim and pricey for duplexes in good shape in a desirable area, and the cost is high enough that it's extremely unlikely you could cover the mortgage just with the rent from the other side, although it could certainly help. And you can't refuse to rent to someone because they have children. If you find the right property at the right price, go for it, but the problem is that rents usually aren't going to be high enough to justify it.

Pros:
reduced mortgage payment

Cons:
you live in a duplex
you are a landlord
property taxes are higher
you have to fix things quickly when they break (furnace, water heater, etc.)
20 something tenants with no kids aren't the most reliable in terms of paying rent
you have a combination of residence and investment property that affects your tax and credit/loan status (can make financing difficult)
if you buy something affordable now, you may outgrow it in a few years and have a hard time financing a second home

Excellent, excellent, excellent post.

[restorationconsultant]

I would look over in Holy Cross, close to downtown and freeway access. You can find a nice duplex in the 100-150K range that is turnkey, rents range from 750-1200 a month, Safe neighborhood,great neighborhood association. Some of the duplexes have been condoed in recent years too which means when the market turns around you could always condo and get more money. Taxes , by comparison to most Meridian Kessler/Broadripple areas are a lot lower. You are also not far from Mass Avenue entertainment arts area.

[plaidmom]

Originally Posted by Naptowner

Yeah, I wouldn't want to live that close to my landlord.

Funny, I was thinking "I wouldn't want to live that close to my tenant".

We actually talked about this the other day as an "investment" property has come on the market around the corner from our house. Upon further reflection, we decided it was a no-go. True, you can keep an eye on the place, but the renters also know where you live. I had visions of the toilet backing up at 3 a.m. or something and me waking to loud pounding on the door.

To the OP, if you are still considering this you may want to ask a few questions over on the Renting Forum:

https://www.city-data.com/forum/renting/

Many experienced landlords over there.

Good luck with your decision.