Before diving into the great reasons to own a duplex in Utah County, lets first answer a very important question:
There are a lot of good reasons to consider buying investment property, but when looking at specific investments, what’s the right option? Purchasing a duplex might be the perfect option for the following reasons:
- Owner occupied financing: If you’re living in the duplex in Utah County you can qualify for owner occupied financing (sometimes even FHA or VA loans). This is beneficial because often investment properties require a higher down payment (20% or more) and a higher interest payment for their loans (usually about 1% higher). Check out our preferred lender’s site for a quick mortgage calculator and current interest rates.
- Tenants pay your mortgage: If you are planning to occupy half of the duplex, then it is often possible that, when bought at the right price, the tenants in the other half of the property can cover most, if not all of the mortgage. This can effectively reduce your living cost to $0. For example, a typical Provo Duplex:Purchase price: $230,000
Down payment: 20% ($46,000)
Financed Amount: $184,000
Monthly Payment (Before tax & Insurance): $878.44
Potential Rent on 1 side: $900
- Mitigated risk: If you’re buying a single family home, townhouse, or condo as an investment property and you have a vacancy, your cash-flow drops to $0. With a duplex, however, if you loose a tenant you’ve got another tenant in the other unit paying rent, so you’ll still have some cash coming in. By diversifying your revenue streams across multiple tenants, your risk of going negative on your month to month cash-flow is reduced.
- Lower Property Tax: Usually your property taxes will be lower if you purchase a duplex producing the same rental income as 2 separate properties. Utah County is no exception.
- Loan Stacking: The best loans on the market are Fannie Mae, Freddie Mac backed loans, but even the most savvy of investors are limited to 10 of these types of loans. If your plan is to build a Real Estate empire using the powerful leverage that comes with these types of loans, then why not get the most bang for your buck and buy multi-unit properties that give you more rental doors per loan.
- Big draws for tenants: BYU and UVU in Provo are two major university that bring in a ton of people who are looking to rent while going to school. Big companies like Doterra in Pleasant Grove, and Adobe in Lehi are also huge draws for renters coming in from out to state to work.
- Favorable landlord Law: Cities like Lehi, Orem, and Spanish fork have fantastic landlord law which reduces your liability and gives you more control over your properties. Property owners in cities with more restrictive landlord law can tell horror stories of evicting troublesome tenants, which can take up to half a year.
- Some of the best resources for connecting tenants to properties: The unsung hero of landlords finding tenants in Utah County is KSL. This powerful (free) classified service helps owners who are managing their own properties find find tenants quick. In addition, Utah County has some fantastic property management firms which really can help take the guesswork out of managing your property.
What is a Duplex by Utah County standards?
With all the compelling reasons to own a Duplex, someone new to the game may get confused by the terminology out there, so lets dive into it a little bit in order to clarify. (Disclaimer: every city’s zoning laws are different, check with us if you have questions about a specific property):
Duplex: 2 properties on one lot with a single tax ID number. This could include Side-by-side connected buildings, up-and-down units, or even two separate buildings. These buildings typically (but not always) have separate utility meters, mailing addresses, furnace/AC, and kitchens. They are more standalone units that do not have to have interior connecting doors between the units. These do not have to be owner occupied for the owner to rent out both units.
Triplex, 4-plex, 6-plex, 120-plex: The same qualifications as the duplex but with more units on the property. Triplex is 3 units, 4plex is 4 units and so forth. The financing for the property changes from 5plex onward. We will write about that more on a future post.
Accessory apartment, mother-in-law, or income suite: These are different names for the same thing. Simply stated, these are semi-private living areas connected to a primary residence. They will have their own address but have an interior connection to the main property. They will often have shared utilities with the primary residence. In Utah County, a owner must occupy the property to rent out an accessory apartment.
With this information, hopefully you feel more prepared to dive into the wonderful world of Utah County real estate investing. If you’re ready to take the next step, use our free Search for all Utah County multi-unit properties and contact one of our agents today about starting your property search.
Leave a comment and let us know if you’ve had success with owning a duplex