Get Rich and Avoid Taxes with Duplex Real Estate Investing
How to get started in Real Estate Investing
Want to buy a Duplex, Triplex or Quadplex? Check out The Duplex Doctors.
Wondering how to get started with investment property or rental property? Check out this video collaboration between myself and Drew Hoefler of TheDuplexDoctors.com about what great investments these properties are.
When I was a financial advisor, I always met people wanting to get involved with rental real estate and investment property. But most of them didn’t have the ability to wisely save up an emergency fund, invest in the markets, pay their daily living expenses, and build up a 20% down payment for their first rental property.
That lead most of them asking:
How can I buy investment real estate with no money down?
Most of these people that were interested in starting up an investment property knew people that had gotten stuck with a townhome or some sort of property during the economic downturn, and they ended up renting it out.
If you’re wondering how to get started in rental property or how to get your first investment property, I highly recommend watching this video put on by the duplex doctors and myself.
One of the best ways to get started with investment real estate, is to do what’s called house hacking. House hacking is when you make temporary sacrifices in your own living situation in order to build up financial momentum or possibly purchase your first investment property.
In this case, the temporary sacrifice is to live on one side of the duplex, and rent the other side out rather than purchasing a single family home or townhome.
The easiest way to purchase your first rental property is to get involved with multifamily real estate such as duplexes, triplexes, or quadplex is.
Why is a duplex the best way to get started with rental real estate?
Because you can buy a duplex with traditional financing if you live on one side and rent the other side out.
In other words, you’ll be able to use your traditional or FHA mortgages, with very low down payments, to purchase a rental property.
Duplexes, triplexes and quadplex are some of the best kept secrets in the investment world. Too few people are able to save up for a 20% down payment on a traditionally purchased investment property, so they end up deciding that they cannot do rental property. bought a duplex allows first time home buyers, and people with 0, 3, or 5% down payments, to purchase a property.
And what’s amazing about Minneapolis’s duplex market, is that the rental rates and rental environment is such that the tenants rent payment might cover your mortgage and then some.
In this example, Drew whole floor of the duplex doctors shows one of his triplexes that he owns and explains what a great value it is. he did what’s called house hacking and lived in one of the smallest units while renting out the larger units. This allowed him to create massive cash flow while having his rent paid for him, and that’s not even including the tax incentives for owning rental real estate.
Long story short, the income from rental real estate is considered passive income which is not subject to self-employment taxes, although it is subject to state and federal income tax. Not only that, but the passive income from your rental real estate we’ll have depreciation and other expenses to reduce its taxable amount.
In other words, real estate is a very tax efficient investment, and it’s also a defensive investment.
During the economic downturn, we saw the housing market take a dive, but the actual vacancy rates and average rental rates did not plummet the way the rest of the market did. in fact, it could be argued that the most defensive investment you can own is one that people have to use in an economic downturn or bear market.
so if you’re looking for a defensive investment, and something that’s tax-efficient, you should look at rental real estate. and the easiest way to get involved in rental property is to start out with a duplex, triplex or multi-family home where you live in one side and rent the other side out.