How to Find Rental Duplexes for Under $50,000 in America

If you are interested in purchasing an investment property, you’ve likely spent some time researching single- and multi-family homes. While both can be excellent investment opportunities, they don’t beat the duplex. First-time investors who invest in duplexes enjoy countless benefits, including the price.

If you are interested in purchasing an investment property, you’ve likely spent some time researching single- and multi-family homes. While both can be excellent investment opportunities, they don’t beat the duplex. First-time investors who invest in duplexes enjoy countless benefits, including the price. Consider Erie, Pennsylvania, for example. The Zillow Home Value Index is $75,700 in Erie, but you can easily find a duplex for less than $50,000 (Zillow, 2019). This is just one of the various places where you can get such a great deal on duplexes.

If you are interested in purchasing an investment property, you’ve likely spent some time researching single- and multi-family homes. While both can be excellent investment opportunities, they don’t beat the duplex. First-time investors who invest in duplexes enjoy countless benefits, including the price. Consider Erie, Pennsylvania, for example. The Zillow Home Value Index is $75,700 in Erie, but you can easily find a duplex for less than $50,000 (Zillow, 2019). This is just one of the various places where you can get such a great deal on duplexes.

Learn some of the benefits of investing in duplexes and find out how to finance your duplex. Then, look at some of the markets with the cheapest duplexes for sale.

Benefits of Investing in Duplexes

Being a landlord of a duplex has its privileges, especially for first-time investors. Many people like to rent duplexes as a way to learn the landlord business (Trulia Contributitor, 2016). People can purchase a duplex, live in one side, and rent out the other. This allows them to learn the landlord business firsthand. They can keep an eye on their tenants without worrying about invading their privacy. They can also spend this time learning more about collecting rent, customizing leases, and screening tenants. This is a way for people to learn on the job.

It also comes with tax benefits. If you live in one side of the duplex, you can deduct the mortgage interest you pay for that side. You will also have various tax benefits for the side you rent out. For example, rental management fees and repairs are tax-deductible. You might even share expenses with the tenant. For instance, you might share utilities. If so, you can write those off, as well.

How to Buy a Duplex

You likely don’t want to take on a second mortgage to invest in a duplex, so you might feel stuck. You can actually purchase a duplex with your 401(k), though.

You have a couple of options for this. First, you can roll your existing 401(k) plan into a self-directed IRA, as long as your 401(k) allows for an in-service distribution (Van Steenwyk, n.d.). You can then use the self-directed IRA to buy an investment property, including a duplex.

There are a few things to keep in mind if you go this route. You will likely have to put 35 percent down if you use an IRA to purchase the property. Also, you will need to reinvest the money you earn back into the IRA. You cannot take out the income until you are 59½, or you will be charged a hefty penalty.

You cannot stay in the property if you buy it from an IRA, and you also can’t claim a capital loss or write off passive income losses. Your contributions are also set at $5,000 a year, along with an additional $1,000 if you qualify for catch-up contributions.

Your second option is to buy real estate with leverage with your 401(k) (Bergman, 2016). Leverage means you can multiply gains and losses, creating a higher return for your real estate investment.

First, it’s important to understand that not all 401(k)s allow investors to purchase real estate. For instance, plans that cover lots of employees rarely allow people to purchase real estate. However, you can get a solo, or individual, 401(k) plan and use it to invest in real estate. These plans aren’t governed by the strict regulations set forth by the Employment Retirement Income Security Act of 1974, making it much easier to purchase an investment property.

Regardless of the option you choose, buying a duplex for under $50,000 is a good option to make money. You can expect to earn $400 or more a month in rent with these duplexes, and even when you factor in repairs, you should turn a profit.

Finding Duplexes Under $50,000 in Erie, Pennsylvania

Erie, Pennsylvania, is an excellent place to begin your search for duplexes under $50,000. The real estate market has been trending down in recent years, and now is a great time to snatch up a duplex for a small amount of money.

Finding Duplexes Under $50,000 in Erie, Pennsylvania

Source: Zillow

For example, you can get a 4-bed, 2-bath duplex in Erie for just $12,000 . It might be a fixer-upper, but the low price makes it easy to invest some extra money into getting it ready for renters.

If you prefer something that is already ready for renters and don’t mind spending a little more money, you can pick up a 4-bed, 2-bath duplex for $23,500 . It was built in 1909, but it’s been updated and is priced to move. It’s actually priced for less than it’s worth, proving just how exciting the duplex market is in Erie.

If you have even more cash on hand, it’s hard to beat this 7-bed, 4-bath duplex for $45,900 . At 4,932 square feet, this duplex will make a very nice home for two families.

These are just a few of the many duplexes in Erie worth less than $50,000. Do some research and find one that meets your investment needs. Just keep in mind that affordable duplexes can go quickly in Erie. Many people realize these are excellent investments, so they are quick to grab them.

Finding Duplexes in Cleveland, Ohio, for Under $50,000

Cleveland, Ohio is one of the hottest real estate markets in the country. In 2018, the market heavily favored sellers, making some real estate investors hesitant to pick up property. That changed in 2019, though. In previous years, there was a shortage of inventory, which caused sellers to charge more for their properties. The inventory started to increase in 2019, and that balanced out the prices (Grzelewski, 2019). Now, it’s both a buyer’s and a seller’s market. That makes this is a great place to pick up a duplex.

Finding Duplexes in Cleveland, Ohio, for Under $50,000

Source: Zillow

There are hundreds of duplexes available for less than $50,000, including cheap foreclosures. Imagine putting $7,000 down and becoming the owner of a duplex. That’s what you can do if you snatch up this 6-bed, 2-bath foreclosure. Of course, with any foreclosure, it’s important to act quickly before someone else buys it or the price goes up. Fortunately, if you miss the opportunity to get this one, you can likely find another on the market.

You can also get an impressive 5-bed, 3-bath duplex for $19,900 in Cleveland . It comes with four parking spaces and additional features. This is so cheap because it’s a short sale. You have to pay cash for it, but at such a low price, that’s not an issue for many investors.

If you want to spend a little bit more on your investment, you can pick up a 4-bed, 2-bath duplex for $29,999 . The deck and yard will be popular with renters, so you shouldn’t have any trouble keeping this duplex full.

This is just a sample of the affordable duplexes you can purchase in Cleveland. Shop around and find the one that will fit inside your investment portfolio.

Finding Duplexes in Buffalo, New York, for Under $50,000

You might think that New York real estate is among the priciest, but you can pick up duplexes in Buffalo, New York, for less than $50,000.

At the same time, the Buffalo, New York, real estate market is hot. Property values are on the rise. If you can pick up a duplex now, you could end up with a sound investment as prices continue to increase.

Finding Duplexes in Buffalo, New York, for Under $50,000

Source: Zillow

There is one thing to keep in mind regarding owning rental property in Buffalo or any part of New York. Tenants have organized in the state in an effort to pass universal rent control (Tobias, 2019). This movement can be traced to New York City. Landlords found a loophole in the city’s rent regulation law and used it to increase rent. The landlords didn’t just increase it a little. Tenant Martina Romero’s rent was increased by hundreds of dollars due to this loophole. She and her neighbors launched a rent strike in 2018 and remained committed to the strike in 2019. Several families living in Romero’s building took action by withholding rent in an effort to change the law. This action is expected to have an impact on regulations moving forward.

Then, there’s Maribeth Sheedy, who lives in Akron, New York. When a new landlord purchased the mobile-home park she lives in, her rent went from $265 to $360 a month. She and her neighbors organized and formed the Akron Home Park Tenants Association in an effort to fight this and other rent hikes in the state. The organization has also decided to go on a rent strike.

Gov. Andrew Cuomo has taken notice of this and has vowed to change the rent laws in New York (Chadha, 2019). During his 2019 State of the State address, he said he intends to make several changes, including eliminating vacancy decontrol and strengthening tenant protections. Ending vacancy decontrol will be a huge move for the state.

Vacancy decontrol essentially removes rental properties from rent regulations. Landlords can hike up the rent when a new tenant moves into a property. This policy would also allow you to set the rent higher if you buy a duplex in Buffalo.

Cuomo will likely change this law soon. If he doesn’t, expect different cities in New York to create their own regulations to protect tenants.

That doesn’t mean you can’t make money in this market, especially if you buy a cheap duplex. However, keep this in mind before purchasing a property. Look at the average cost of rent in the area to make sure you can turn a profit without increasing the rent. If you can’t, keep shopping until you find a duplex that will help you net a nice profit.

Finding Duplexes in Scranton, Pennsylvania, for Under $50,000

Scranton, Pennsylvania, has an interesting real estate market. More than 20 percent of homeowners were underwater in their mortgages during the first quarter of 2019. It only trailed Baton Rouge, Louisiana, in this regard (National Association of Realtors, 2019). Compare that to 9.1 percent of all the homes in the United States and it’s clear that Scranton has a problem. Far too many people owe more than their homes are worth.

As an investor, that might scare you off. Home values have slowed to the point that people aren’t able to build equity like they were before.

In reality, this can be good news for an investor who intends to hold the property for some time. Expect to see some short sales in the market as people try to get out from under these underwater mortgages. Short sales are a real estate investor’s best friend and can help you pick up some property for less money than it’s worth.

In fact, now is the perfect time to grab a duplex in Scranton. The market is expected to rebound by 2020, so the value of your duplex could increase shortly after you purchase it.

Finding Duplexes in Scranton, Pennsylvania, for Under $50,000

Source: Zillow

Right now, there are lots of options for duplexes under $50,000 in Scranton. You can pick up a 4-bed, 2-bath duplex for $39,000 . This property is gutted and needs to be restored, but if you’re handy, you can turn this into a money-making investment property.

You can spend a little bit less on a fixer-upper by getting this 4-bed, 2-bath duplex for $35,000. At $19 a square foot, it’s practically a steal, even though it needs some work.

You can also get a 2-bed, 2-bath duplex with a fenced-in yard for $49,900 . This unit has separate utilities, making it easy to rent out to two families. The fenced-in yard is spacious enough for pets, so if you’re a pet-friendly landlord, consider grabbing this duplex. Pet owners are always on the lookout for a place to live with their furry friends, so it’s likely you could fill this duplex quickly.

This is just a snapshot of the duplexes under $50,000 in Scranton. Stay on the lookout for more units as they become available. This market is going to heat up, so act quickly if you want to get one for a cheap price.

Finding Duplexes in Johnstown, Pennsylvania, for Under $50,000

Johnstown, Pennsylvania, is the most affordable housing market in the United States for younger generations. People ages 25-44 are able to buy a home in Johnsonville and live the American dream (Hurst, 2016).

You might think this means that landlords can’t thrive in the area, but rentals are actually on the rise.

Finding Duplexes in Johnstown, Pennsylvania, for Under $50,000

Source: Trulia

That means landlords can enjoy the best of both worlds. They can snatch up affordable properties and find renters to occupy it. That’s the perfect situation for new investors who want to get started in the business.

When it comes to finding a duplex under $50,000 in Johnstown, you have lots of exciting options. You can get a duplex with 3 beds and 1 bath on each side for $19,900. This duplex is located on the West End and is close to pizzerias and other spots that renters will love. As you can probably guess from the price, this duplex isn’t quite ready for renters yet. You will need to install new flooring before you can rent it out, but it’s a nice-looking duplex that could help you get started with your investment portfolio.

Do you prefer something that’s move-in ready? You can get a unit with 1 bedroom and 1 bath on each side for $32,900. It has new windows and a three-car garage. You can also convert this duplex into a tri-plex if you want to make even more money.

You can also pick up a move-in-ready duplex for $40,000. Each unit has 2 beds and 1 bath. The owners have updated the kitchens and bathrooms, and the duplex is situated on a large lot. There is also a detached building for storage.

This is just a snapshot of the duplexes available for under $50,000. The market is full of them, so you won’t have trouble finding one you want.

Before you dive in, though, it’s a good idea to consider some of the issues that landlords in Johnstown face. Landlords have banded together to form the Greater Johnstown Landlord Association to address some of the challenges that they face and to find solutions (Siwy, 2017).

One of the biggest issues that landlords face is the municipal utility act. If a tenant fails to pay utility bills, the landlord is held responsible and can face liens. When this happens, the only recourse is to take tenants to court. Unfortunately, if the tenant doesn’t have a job, it’s hard to get that money back. The court might issue an order to garnish the tenant’s wages, but that only works if the tenant has a paying job.

The city has other laws on the books to prevent blight. This can also hurt landlords if their tenants don’t take care of the property.

The best way to avoid these issues is by following property tenant screening strategies. Check credit scores and run a background check to ensure you only rent to qualified applicants. Once you find a quality tenant, go over your expectations with him or her. Also, include inspections in your lease so you can check on the property from time to time.

Understanding Taxes with Duplex Investments

You likely have an idea of the duplex you want to purchase, but you still have some questions. Taxes are likely the biggest question mark regarding your investment. The idea of having two properties in one makes it harder to understand how the tax process works. Let’s look at how rental income is taxed in a duplex (Lander, n.d.).

Overview of Rental Income with a Duplex

When you make rental income from your duplex, the government taxes it as regular income. You’ll pay the federal and state income tax rate on the income. You only pay taxes on your profits, though. You will start with the gross income, subtract your deductions, and pay taxes on the profits.

Start with the Gross Rental Income

To figure out how much you’ll pay, you must begin with your gross rental income. This is all the money you make from the duplex, without the deductions.

You will report your rental income on your Schedule E tax form. It goes on the third line of the form.

Expenses

Your expenses will reduce your profits. You can deduct:

  • Mortgage interest
  • Property taxes
  • Utilities, if you pay them for the tenants
  • Repairs
  • Management fees
  • Third-party services, including snow removal and lawn maintenance

In addition, you can write off the property’s depreciation. This process allows you to deduct a portion of the purchase price of the duplex. You will deduct a portion each year that you own and rent the property.

You will add your expenses to the Schedule E form on lines 5-19. You’ll total your expenses on line 20. Subtract your expenses from your gross rental income to determine your taxable profit. Put this on line 21. Keep in mind that this number can be a loss. While many landlords turn a profit during their first year, some do experience losses.

Losses are referred to as passive activity loss. You might be able to use the loss against your other income. If your adjusted gross income isn’t over $100,000, you can use up to $25,000 of losses to reduce the taxable amount of income. As your income grows, the amount of losses you can use to reduce it goes down, and you cannot use these losses at all if your AGI is more than $150,000. This can be confusing, so you might want to consider using an accountant for help. An accountant will calculate your taxes for you and protect you in case you are audited.

What if You Live on One Side of the Duplex?

If you live on a side of the duplex and rent out the other side, you’ll need to handle your taxes a bit differently. You will be taxed for two different properties instead of just one property.

First, let’s look at the half of the property you live in. You can deduct half of your property taxes and your mortgage interest on your Schedule A. For the other half, you will fill out the Schedule E, just as you would if you rented out the entire duplex.

In addition, you can write off half of your duplex’s expenses on your schedule E form, as long as they benefit the entire unit. For example, if you hire someone to mow the grass, that benefits the entire unit, so you can write off half the expenses. The same is true for repairs and other services. Again, if you are not sure what you can and can’t deduct, hire an accountant. It might be a little pricy, but the accountant will ensure that your taxes are done properly.

How to Determine the Rent for Your Duplex

You want to make sure you set the right rental price for your duplex. There are five factors involved in pricing rentals (Eberlin, 2018).

1. Look at the Neighborhood

Your competitors will help you determine how much to charge for rent. Consider other rentals in the neighborhood. Find duplexes that are similar to yours in the neighborhood and see how much the landlords charge. These rentals should have the same number of bedrooms and bathrooms.

You can easily compare the prices by looking at online ads and visiting other duplexes that are available for rent. Also, you can find information about rental rates in your area online.

If you still aren’t sure how much to charge, a local Realtor can help you come up with a price based on the neighborhood. Realtors have a wealth of knowledge on pricing and can give you an accurate starting figure.

2. Consider the Amenities

The neighborhood is a great starting point, but you also need to consider the amenities that your rental offers. Does your duplex have more square footage than other rentals in the area? Does it have an excellent view or a magnificent backyard that’s perfect for relaxing? Maybe it has huge closets or an updated kitchen with stainless steel appliances. Consider all the “extras” you offer tenants before setting the price. These extras are justification for charging a bit more for the duplex.

3. Think About Your Expenses

You’re renting a duplex for one reason and one reason only. You want to turn a profit. That means you need to consider your expenses before setting the rent. The rent must cover the principle and interest of the mortgage loan (if you have one), along with taxes and insurance.

In addition, consider the amount you’ll spend on maintenance and repairs, along with vacancy costs. After you look at your expenses, you’ll have a better idea of the minimum amount of rent you can charge and still make a profit.

4. See if You Have Leads

After you set your price, you might not be done quite yet. If no one is asking to see your property, it could be because of the price of the rent. If it is too high for the area, people will pass your property up. Don’t jump the gun, but if you go for months without any serious inquiries, it might be time to lower the rent.

5. Make Adjustments

When tenants leave, it’s wise to look at the market and see if it demands a rent increase or decrease. The market is the biggest factor in setting rent prices. If you do not make adjustments, you could end up losing profits or losing tenants. Remember that this is an ongoing process, so always stay in tune to the market. At the same time, check local regulations to see if you can raise the rent.

How to Find Renters for Your Duplex

You’ve set the rent, and now it’s time to find qualified renters for your duplex. You must follow some steps to choose the best tenant for your property (Eberlin, How to Choose the Best Tenant for Your Rental, 2018).

1. Understand the Law

There are two laws you must consider before renting a duplex. First, you need to consider the federal law. The Fair Housing Act has a set of guidelines to prevent landlords from discriminating against applicants. You cannot discriminate based on race or color, national origin, religion, sex, familial status, or disability.

Next, you need to consider local laws. States and local governments have their own requirements in place. Depending on where you are located, you might have to follow certain rent or application guidelines. Familiarize yourself with the local laws before you advertise your property.

Then, when you do choose to advertise it, create a free rental application that follows the guidelines. Consider putting the application up online, so you don’t have to deal with paper applications. This is much easier and allows you to streamline the rental process. If you have the application online, you can then use a lease generator to create the lease from the application you select. That means you can completely avoid manual data entry.

2. Check Each Applicant’s Credit

You will likely have lots of potential tenants that look good on paper. They have great jobs or have spent years in the same rental, so you think they will be a good fit for your property. Still, you need to dig deeper and run a tenant credit check to ensure you choose someone who is financially responsible. Look for prior evictions and check the income-to-debt ratio when you pull the credit report. This will give you a better indication of how likely the application is to pay the rent each month.

3. Run a Background Check

You need to be careful about who lives in your property. You don’t want to hand over the keys to a criminal who is running from the law. Run a free tenant background check to look for minor and major criminal offenses.

Keep in mind that state guidelines might limit what you can do with this information. For instance, landlords cannot refuse to rent to people with certain convictions. Learn your state laws and then use the background check wisely.

4. Consider the Rental History

Previous landlords can also help you find a good renter. Call the tenant’s last two landlords and ask about rental payments, the reason for the move, and general questions related to how they were as tenants. For example, did they leave the property in good condition? Did they follow the rules? Many landlords only call one previous landlord, but that is a mistake. It’s always a good idea to talk to two landlords before leasing the property.

5. Look for Stability

Tenant stability is very important. If a tenant changes jobs every other month and moves every six months to a year, he or she is not very stable. You might have trouble collecting rent, or you could have a vacancy before the lease is up. Look over the full history to find a stable tenant. This will help you choose a tenant who will stay in your duplex for the long term. That way, you won’t have to deal with vacancies and finding new renters.

6. Consider the Size of the Family

When you rent a duplex, you will have a separate renter on each side. If one of the sides has too many tenants, that can disturb the renters on the other side. As a rule, do not allow more than two people per bedroom in your unit. That means if the duplex has one bedroom on each side, you should only allow two people to live in each rental. If you allow too many people to move in, you can expect noise complaints from one side of the duplex.

There are some exceptions to this rule. For instance, if the duplex has a large den that can be used as a bedroom, it can accommodate more tenants. You also need to consider the age of all the potential tenants. Renting a one-bedroom to two adults with an infant isn’t the same as renting a one-bedroom to three grown adults.

Consider the property and the age of the potential tenants and then use that information to set guidelines. This can save you a lot of headaches down the road. If you don’t set limits, you can expect some phone calls from angry tenants.

Are You Ready to Make Money with a Duplex?

You don’t need a lot of money to buy a duplex, especially if you purchase one in the cities mentioned above. Consider using your 401(k) to free up the money and then make your purchase. After you own the duplex, fix it up if needed and advertise it. If your duplex is priced fairly, the applicants will likely start rolling in quickly. Look over each one and then run checks to find a quality tenant. Once you find a good tenant, rent the property and maintain it to keep the tenant happy. Also, consider using online rent collection and other tools to make managing your property as easy as possible.



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