Are you new to duplex property investment? Want to know how much deposit you’ll need for a duplex investment property? Read to get answers to these and other duplex investment property questions.
Investing in a duplex unit is without a doubt a savvy way of generating passive income and build wealth. With such possibilities, it’s no surprise why many are turning to duplex investment property. If you want to make such an investment, it is important to know the costs. By doing so, you’ll know the amount of finance you require for your investment. In other words, you’ll know how much deposit you’ll need for your duplex investment property.
So What Are The Costs Involved?
While the costs involved are vast especially if you settle with building your investment property, you can get a clear picture by speaking with an expert. Experts like representatives of Duplex Invest are sure to give you a detailed list of costs involved. But just to give a hint of the costs involved, below are three costs you can expect to incur when investing in duplexes;
- Property Management Fees
- Taxes & Insurance Fees
- Legal Advice & Miscellaneous Fees
Once you’ve listed all the costs your investment needs, decide on the duplex you want to build. Why is this important? Well, it determines the type of mortgage you can ask for and receive. Duplexes with a total of four or fewer units are treated by lenders as a residential real estate. If your property is labelled a residential real estate you can build or buy it using a regular or single family home mortgage.
If your duplex has five or more units, the process of seeking finance for it in terms of mortgage is different. In case you are wondering why this is because lenders treat your unit as a commercial real estate. Many investors choose to avoid investing in duplexes that have five or more units. Why is this? Well, this is process is not easy. If you were to apply for a mortgage to finance this type of investment, you’ll note that it is difficult to get approval. This is why many investors choose to go for a duplex with fewer units.
What’s The Maximum Mortgage Amount For A Duplex Investment Property?
Whether you plan on occupying one unit or not, you can seek financing for your investment property from several lenders. To get a complete list of lenders, do visit Your Mortgage. There you’ll find a list of financial institutions in Australia that offer loans perfectly tailored for owner occupant investors.
When seeking finance, keep in mind that investing in duplexes, on the other hand, has its own share of loan limits. If you are planning on investing a two unit duplex, the loan limit increases by $100,000 or $200,000. If you are investing on a three-unit duplex, the limit increases by $200,000 or $250,000 while a loan for a four-unit duplex increases by $300,000 or more.
Can You Use Rental Income To Qualify For A Loan?
If you intend on buying or building a duplex or multi-home, you can use rental income to qualify for a loan. This, of course, applies only if you intend on renting out your duplex. For you to qualify for this loan type, you a need to provide a lease signed by your renter. You cannot ask for a loan approval based on anticipated rent income. Once processed, the lender uses a percentage of your monthly rental income as part of the loan’s underwriting.