A common confusion is thinking a twin home is the same as a duplex. A twin home looks like duplex, walks like a duplex, but doesn’t act like a duplex. Twin homes do look like duplexes, and do have a shared common wall but the main difference is the ownership interest. A twin home has an individual owner who has rights and responsibilities for their own side and for their own lot. In other words, twin homes are basically half-homes with with their own respective lot with a lot line landing between the two homes.
Duplexes are two properties on one lot. You can have duplexes that have different owners but they have a condo ownership interest meaning that there is shared lot ownership.
An attached home means that a home shares a common party wall usually on both sides of the property. A detached home means that a home is free of any shared walls and stands alone.
Duplexes are described as semi-detached but i have also seen it described as semi-attached. In either case they mean the same thing depending how you refer to how they are attached. If you are referring to the point where the two units are attached then they are “semi-attached” at this point. If you referring to the fact that the overall duplex house is detached from any other property then you are referring to the fact that it is “semi-detached”.
In fact the prefix “semi” means half, so in essence when you say semi-detached or semi-attached you are basically saying the home is half-detached at one side or half-attached at one side.
There is some confusion out there about what duplexes are and to simplify and clarify some of the language or semantics of this type of structure, let’s start with a basic definition of what a duplex is.
A duplex is a housing structure that has two unit dwellings attached to one another. Each unit has a separate entrance and is usually metered for its own utilities. Both units are located on one lot.
Now the confusion most of the time is caused by terms that specifies a usage of a duplex structure, a synonym, or a term that is non-exclusive to what a duplex is.
We will define the following terms in future posts to help differentiate them from the basic definition of what a duplex is:
- Two Flats
- Twin Homes
- Zero-Lot Line Homes
- Semi-Detached Homes
- Patio Homes
- Duplex Condos
There are 3 main multi-payment mortgage strategies for a property:
- The true bi-monthly mortgage payment.
- The bi-weekly mortgage payment.
- The additional payment over your payment book amount.
The true bi-monthly payment means that you pay half your mortgage amount at two points during the month. For example you may pay on the 1st and the 15th of the month. You are therefore making 24 payments per year. With this option you will accelerating your payment towards your principal but really its only shaving a small amount of total interest and number of payments from your term.
The bi-weekly payment means you pay half your mortgage amount every 2 weeks. You are paying 26 payments. With this option, again you are accelerating your payment towards your principle and you will see some real mortgage interest savings but you will also have the burden of getting two payments per month on time.
The additional payment over mortgage amount strategy is just the desire and ability to pay more on your mortgage each month against your balance. Be sure you state that the additional money is to go to principle rather than interest! The difference between this strategy and other two is that this option allows you pay extra whenever you want. The duplex scenario where you live on one side and rent out the other effectively gives you a extra payment per month to apply to the mortgage amount as desired. Even if you have a 30 year term, a certain amount over your base monthly mortgage would give you a payoff time line of 15 years for example. Duplexes have several financing advantages; one major one is the ability to generate cash flow that allows to pay off notes quicker.
There are many occasions where buying a duplex makes sense, but with this post we will focus on one particular scenario; buying a duplex for college living. Buying a duplex for college living is a great option since there is usually a high level of renters in a small geographic area. College students are looking for roommates and friends travel off together for higher education. This is an ideal situation. Not only will you most likely have one to two paying roommates, but you will also have another unit collecting rental payments. Here is a some first steps for both the entrepreneurial college student and for the parent of a freshmen or sophomore college kid:
- Look for duplex properties within a 5 mile radius of campus.
- Contact a bank, or loan officer and see about your financing options.
- Talk to people in your classes about a nice place to live close to campus and determine if you could handle collecting rent from them. (The heavy drinking party animal that likes to punch holes into drywall would be someone to avoid.)
- Get a sense of your college environment. Where are the party areas? Where do you grad students live?
- If financing is unavailable or the terms are very bad based on your credit history, talk to your parents or family members and propose it to them.
- Be professional and be honest with yourself. If you are too shy to ask for rent, then this is not for you.
Parent of College Student:
- First determine if your college student is responsible enough to collect rent and able to be a landlord. Everyone thinks that their child “has so much potential”, but it is about maturity, not just ability.
- Look within a 5 mile radius of the campus. Let your child scope out the place before doing anything.
- Determine your financing options.
- Ask your son or daughter to describe their tenant prospects. If they are going to live with someone that they know from high school, make your conclusions about your son’s or daughter’s ability to collect rent each month from them. Be professional, just cause your kid says they are “cool”; still do your due diligence.
Another thing to consider when looking at a duplex, is to get the right type of insurance. If your helping out your college aged kid a quick thing to do to save on home insurance is to combine the auto and home policy of the duplex with your kid’s car insurance, which will save money on both. If you are looking in Indiana for example shop Indiana Car Insurance rates online and then get home quote with the same insurer and look at the difference.
Being a landlord will always have its risk but buying a duplex for college could have great benefits.