One Milwaukee duplex, every figure sourced to a closing statement, a lease or a servicer statement: the financing, the cash it took to get in, where the duplexes are, the landlord rules, and what the building really cash flows.
Lucas Murphy, Realtor - eXp Realty. Phone: (414) 458-1952. Email: lucas.murphy@exprealty.com.
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You buy a building with two to four units, live in one of them, and lease the rest, so somebody else's rent covers part of your payment. Because you live there you can use the loan programs meant for a home rather than the ones meant for an investment, which is where most of the advantage comes from. Your tenant does not pay your mortgage. They pay a large part of it.
Less than most people expect, but the down payment is not the whole number. FHA is 3.5% down on one to four units, conventional 5%, and VA 0% for eligible veterans. Lenders will usually also let part of the expected rent count toward your income: roughly three quarters of the lease rent on a unit that is already leased, or the appraiser's market rent opinion on one sitting empty. On my own $234,000 Milwaukee duplex in May 2022 the down payment was $11,750, but total cash to close was $18,368 once lender, title and escrow costs were in, and about $8,977 of that left my account before closing day for earnest money, the inspection and the appraisal.
Thinly, once you are honest about set-asides. With both units of my duplex leased at $2,600 a month against a $2,050 payment, holding back the conventional 15% of gross rent for vacancy and repairs leaves about $160 a month. That is $1,920 a year, and a single vacant month costs $1,500, so roughly 1.3 months of vacancy erases the entire year. Cash flow is thin on a duplex, and anyone telling you otherwise is selling something.