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This morning I (Brandon) received a message from my little brother Chris.He asked, “ I want to buy a duplex, what is the first step? Do I get a real estate agent?Get pre approved? What should I do? ”Of course, I gave him a few resources to read that I had previously written, like H ow toBuy a Rental Property in the Next 90 Days and How to Hack Your Housing and GetPaid to Live For Free but then said to myself “ self – ( that’s what I call myself ) it’s mybrother and I really want him to succeed. So why not make an guide directly for him thathelps him get from A Z? ”After all, my first rental property was a duplex and I’ve purchased several since that day.I love duplexes and I’m super passionate about helping others get started with duplexinvesting as well. So that’s what I’m going to do today, for the benefit of Chris and theBiggerPockets audience. In this eBook, I’ll talk about: Why Buy a Duplex? What’s the First Step? How to Find a Duplex How to Analyze a Duplex? How to Finance a Duplex And a lot more.Keep in mind, while the focus of this article is on a “duplex” – the exact sameinformation can be used to buy a single family house, a duplex, a triplex, or a 4 plex: soCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

don’t limit yourself to just a duplex. In fact, if you are going to go through all the work offinding a duplex, you might as well consider the larger properties (3 or 4 unit) in case abetter deal can be found this way.Furthermore, I’ll be approaching this article from two places:1. Someone looking to buy a duplex and live in one half of it2. Someone looking to just buy a duplex as a full rental.Whichever of these two positions you find yourself in, I believe this article can help.With that, let’s get to the article. The following is “How to Buy a Duplex.”Why Buy a Duplex?In the beginning, I had no idea what I was doing, honestly.I was 22 years old and had purchased, fixed up, and sold my first property my primaryresidence. Suddenly I found myself facing the very real possibility that I was going to behomeless. Sure, I could go find a place to rent but I had been bitten by the real estatebug and knew that real estate investing was going to be my ticket to financial freedom. Iread a few books (including Larry Loftis’ Investing in Duplexes, Triplexes, and Quads:The Fastest and Safest Way to Real Estate Wealth – which is incredible!) so I knew thatthere was potential in a small multifamily property. (To see my other favorite books,check out B iggerPockets Presents : The 21 Best Real Estate Books Ever .)Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

I called up my agent, found a small duplex that was a bank repo (the Kurt Cobainduplex that I talk about in How I Accidentally Bought Two of Kurt Cobain’s FormerHomes and Why That’s Not Even The Best Part. ), and purchased it for 80,000. I spenta few weeks cleaning it up, painting it, and doing small maintenance work and thenrented it out. My total mortgage payment was a little over 600 per month and I rentedthe front house out for around that same amount meaning I was living almost for free!(Just paying utilities.) A year later I moved out and rented the other home out, and eversince I have been receiving significant cash flow each and every month and willcontinue to for the rest of my life. This is what started my obsession with smallmultifamily properties and duplexes in general.So why should you buy a duplex?Well you shouldn’t.You should buy a great duplex deal .Buying a great duplex deal can give you several unique benefits, such as: Great cash flow Pay rent to yourself, rather than some landlord The ability to gain two units in one transaction The ability to live free or cheap while the other tenant pays your bills A low risk introduction to the world of landlording Relatively easy, long term financingCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

Relatively easy leasing of the unit(s) And more.Again: simply buying a duplex is not the secret to success. If you buy a bad deal, youmight as well keep renting! However, if you do your homework, shop smart, and snag agreat deal, a duplex can be a great springboard to help you build your financially stablefuture.How to Buy a Duplex: Step by StepBefore I dive too deep into the process for finding, analyzing, and financing a duplex, letme give you a broad 30,000 foot overview of the entire duplex buying process,beginning to end. Keep in mind: these steps may change slightly depending on thebuyer, but this is how I treat a purchase:1.) Get Educated – You are already doing step one, so congrats! It’s important you gaina solid understanding of how the process works, how to analyze deals, etc beforegetting in too deep. This will help you avoid the risk of getting taken advantage of. I’dalso recommend you read through The Ultimate Beginner’s Guide to Real EstateInvesting to help you gain a solid foundation for your future as a real estate investor.Also, The BiggerPockets Podcast is, perhaps, the single greatest resource for realestate investors in the history of mankind. Seriously. And it’s nothing Josh Dorkin or I doto make it that way; it’s the honest, brutal truth from our guests. Incredible!Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

2.) Get Pre Approved – When you are ready to start the process, it’s important to getyour financing lined up first. Granted, you may want to switch around step #2 andstep #3 because a good agent can refer you to a good mortgage broker , but eitherway, it’s important to get your financing lined up. We’ll talk more about the differentfinancing options you have in a little bit, but definitely get to a bank or mortgagecompany and open up the conversation.3.) Get in Touch with a Real Estate Agent – If you are buying on the MLS (this is thelist of all properties for sale through other agents – the most common way to findproperties) you’ll want to find a great real estate agent to work with. Don’t worry: realestate agents are typically FREE for the buyer, as the seller pays the fee! I’drecommend finding an agent who has the following traits: Knowledgeable about working with 1st time homebuyers Knowledgeable about duplexes and other small multifamily properties Tech savvy Quick to respond to questions Patient with you Hungry (they want to help you. You are not a burden – you are theirpaycheck!)For more tips on finding a good agent, see The Epic Guide to Finding anInvestor Friendly Real Estate Agent or How To Find A Investor Savvy Real EstateAgent .Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

4.) Define What You Are Looking For – It’s important that you let your real estateagent know exactly what you are looking for. If you want a duplex, let them know! Agood agent can hook you up with automatic emails that let you know about all the newdeals that come up on the MLS, so be sure you have some defined criteria set. Thiscriteria should include, at minimum: How much do you want to (or can you) spend? What towns/neighborhoods will you buy in? What property type do you want? (Duplex, triplex, ect) What kind of condition would you prefer? (trashed, move in ready, etc.)Let your agent know about your criteria and have a discussion about what that mightlook like. A good agent will know the local market and can help you know what ispossible.5.) Start Looking – Next, it’s time to start looking for a good deal. There are severalmethods you can use to find good deals, which we’ll talk about in a moment, but mostlikely your real estate agent will supply you with a list of potential properties. It’s also agood idea to look online for properties yourself, in case your agent missed any.Websites like Z illow.com , Trulia.com , and Redfin.com can be great for scanning throughpotential deals, but keep in mind: these sites never contain all the information and mayalso contain faulty data. Your agent will ultimately have the best data.6.) Do the Math – Once you find some potential deals, it’s time to get out your pen andpaper and start analyzing the deals. We’ll talk more about analyzing deals in a moment,Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

but I’d recommend that you use the BiggerPockets Rental Property Calculator toanalyze potential deals. Just yesterday, I looked at a duplex deal that appeared to beawesome but after running it through the calculator, was a terrible deal! Again, we’lltalk about the analysis side of things in just a moment.7.) Make an Offer – Once you find a deal that pencils out, it’s time to make the offer.Your agent will do the bulk of the heavy lifting with this and will fill out the paperwork foryou. If you are not using an agent, you may have to find the correct forms yourself –which you can usually obtain for free from a local title company. At this point, your offerwill either be: Accepted (yay!) Rejected (boo!) Countered (most likely.)You will need to engage in some negotiation with the seller until you either come to anagreement or part ways. Keep in mind: negotiating can force you to get emotionallyinvolved and encourage you to pay more than you should for a property. Stick with yourmath and don’t pay more than you should!8.) Do Your Due Diligence – Once you and the seller agree to all terms (known as“mutual acceptance”) it’s time to do your due diligence. This is the time when you willinspect the property and make sure it has everything it is suppose to have. I’d HIGHLYrecommend hiring a professional home inspector (usually under 500) to look at theproperty and give you a detailed report of what needs to be fixed. After the inspection,Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

you can either choose to accept or reject the property – or make the seller pay forall/some of the repairs. It’s all up to negotiation. During this time you will also finalize allthe loan documents (which can be annoying!) and review any leases on the property.9.) Close on the Property – Next, it’s time to make the property your own. Dependingon what state you live in, you will either close at a title company or an attorney’s office.Your agent should help you walk through any difficult spots up to this point.10.) Rent The Unit(s) Out – Finally, it’s yours! However, the fun is just beginning. Nowit’s time to manage the property (or hire a property manager to do it for you.) This iswhen BiggerPockets comes in really handy. BiggerPockets.com (this site) is here to helpyou become a successful real estate investor, and everything on the site (from thePodcasts , Blog , Forums , Calculators , and more) is geared toward this end! Takeadvantage of this incredible social network!Now that you have a broad overview of how this all works, let’s move on and get intothe nitty gritty of buying a duplex, beginning with finding the best deal!How to Find a Great Duplex DealThere are a lot of different ways to find good deals, some easy and some hard.We talked about using a real estate agent to find deals The MLS, and we also talkedabout using online portals like Zillow, Trulia, Realtor, and Redfin. But let’s talk aboutsome more “creative” methods for finding duplex deals, for those who either need theCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

extra push (because deals are too hard to find on the MLS in your area) or those whowant the extra push (because they want an even better deal!)Keep in mind: The following techniques are outside the realm of what a real estateagent will do, simply because there is little chance that they can make money off it.Therefore, if you pursue any of these options, understand that you may be slightlyalone!1. Driving for Dollars – The art of driving around potential neighborhoods,looking for signs of “motivation” (long grass, boarded up windows, etc) andtracking down the owners via the public record. For more info, see “ TheDriving for Dollars Bible ” by Chris Feltus.)2. Craigslist – You can actively look for potential deals in the for sale sectionof Craigslist of course but you can also look for potential deals bycontacting landlords who are listing properties for rent on Craigslist.Furthermore, you can actually place ads on Craigslist, telling the world thatyou are looking to buy a duplex. For a great strategy on automating yourCraigslist deal sourcing, see Jaren Barnes’ epic article “ 5 Simple StrategiesFor Real Estate Acquisition Domination! .3. Direct Mail – Direct mail is the process of sending out hundreds or eventhousands of letters to specific property owners with the assumption that asmall number will contact you about the letter and an even smallerpercentage will be a good enough deal to buy. Many wholesalers and otherreal estate investors find the bulk of their deals this way. For moreCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

information on direct mail, don’t miss my article, “ The Ultimate Guide toUsing Direct Mail Advertising to Grow Your Real Estate Business .”4. Networking – A lot of landlords are tired of owning their rental properties,so by networking with those individuals you can often find incredible dealsthrough the power of conversation. A great place to do this is in theBiggerPockets Forums, where you can meet investors from all across theUS and in your backyard. Use BiggerPockets.com/meet to locate membersin your town and grab coffee or lunch with them. Also, attend (or start) alocal real estate meetup where you can get to know the movers andshakers in your local real estate investment community.5. The Marketplace – Definitely be sure to check out T he BiggerPocketsMarketplace for potential deals as well, and be sure to set up KeywordAlerts for your local city name so you’ll be notified when new listings fromyour area are mentioned!There are many more strategies to find good deals than just what I’ve mentioned here,but hopefully this gives you a good place to start. Let’s move on and talk about theprocess of analyzing duplex deals.How to Analyze a DuplexIf you order a bad hamburger from McDonalds, you can throw it away. If you buy a badstock, you can sell it. If you get a bad dog you can train it. However if you buy a baddeal, you might be stuck with it for YEARS.Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

This is why I’m so passionate about learning how to analyze a deal.The fact is: if you don’t have the right math going into a deal, you’ll never get theright profit coming out of it. You make your money when you buy. This is why athorough analysis is SO important. So let’s walk through how I analyze a potentialduplex.First, whether you plan on living in the duplex or not, I think it’s important to do theanalysis as if you were not, because chances are: you won’t live there forever, so itHAS to make sense as a rental, in my opinion. Therefore, that’s what we’ll be focusedon today.When analyzing a duplex, we’re going to be looking primarily at the cash flow , which isthe extra money left at the end of the day. The concept of cash flow is fairly simple(Income minus Expenses) but in reality, it can be difficult. There are numerousexpenses that no one ever thinks of but MUST be accounted for. Things like: The Mortgage Mortgage insurance (PMI or MIP) Property Taxes Property Hazard Insurance Flood Insurance Earthquake Insurance Water SewerCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

Garbage Electricity Natural Gas Propane General Maintenance Upkeep Landscaping Repairs New Appliances Capital Expenditures Office Supplies (stamps, envelopes) Software Gas/Mileage HOA (Home Owner’s Association) Dues and Fees and Assessments City Taxes Advertising Payroll Property Management Vacancy Rate Probably a lot more I’m not thinking of If you forget one of these things, you are going to end up with less money that youoriginally thought. That’s not good! So when you are looking at potential cash flow besure you are taking into account all these expenses.Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

It’s for this reason, we created the Rental Property Calculator , so you can simply plug inthe numbers on a potential deal and see how it pencils out. Let’s go ahead and do theanalysis on a property that I looked at theother day:(this was a duplex in my town that actually metthe 2% Rule , which indicates it should be agreat deal:)Where I thought this was going to be a gooddeal, in the end, it looks like the total cash flowwould be just 20.88 per month! With the 20,000 investment this property would take,that’s a miserable 1.19% return on investment!Yikes! I could do better than that with a bankCD!Before I move on, let me just emphasize thisone more time: you need to know how to dothe math, and the best way to do this is withthe Rental Property Calculator . So head overthere, try it out (you can try it 3 times for free!)and sign up for BiggerPockets Pro to getunlimited use.Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

How to Finance a DuplexI’m not a mortgage professional, but I’ve purchased a few duplexes in my day so I’mhappy to share what has worked for me and others.When deciding how you want to finance your duplex, you have a few good options. I’drecommend researching each of these in a bit more detail to decide if it’s really whatyou want to do – then pull the trigger and make some phone calls. Below are the 5 mostcommon methods for financing a duplex:1.) Cash – If you have the cash, then this one should be easy. However, most peopledon’t so I’m not going to spend a lot of time on this.2.) Conventional Loans – Conventional loans are the traditional, run of the mill loansthat you can get at pretty much any bank or credit union. Typically you will need to putdown 20% to obtain these loans (depending on the bank, of course) and they areusually (not always) fixed rate (meaning the rate will never change) and carry a lowinterest rate. If you can get a conventional loan, and you have the 20% or so downpayment, this is a great option because of the stability that comes with a conventionalloan.To find a conventional loan, just head into your bank and talk to the banker. These arethe most popular loans on the planet, so they are easy to find; but here’s a word ofwisdom: Nearly every bank has the same rules and can do the same loan BUT, whilethe bank loans may be almost identical the BANKER is the important piece of theCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

puzzle. A good banker can get loans closed that no one else can – because they aresmart, creative, and persistent. So talk with 4 6 different banks and find a banker whoappears to be exceptional. Or more importantly – get recommendations from others tofind the best bank/banker to work with.3.) FHA Loans – The FHA (Federal Housing Administration) is a government agencythat exists to help America become homeowners through a loan program that allowsbanks and other lenders to finance to offer extremely low down payment loans tohomeowners. An FHA loan requires just 3.5% down payment, which means on a 100,000 property, you only need to pay 3,500 (plus closing costs.) In comparison tothe conventional loan, which usually requires 20% or more down, this can be alife saver to homebuyers. Keep in mind, the FHA loan does have a few extra costs thatcan make your payment a bit higher (known as MPI or PMI) so be sure to calculate thatwhen doing your analysis.Keep in mind, and FHA loan is ONLY for individuals who plan on living in the unit for atleast one year, so you will have to move into the duplex to use this option. The coolthing is, however, is that an FHA loan is good for single family houses as well asduplexes, triplexes, and fourplexes.For more information on FHA loans, don’t miss t his article and to find an FHA loan, justask any local bank, credit union, or mortgage professional if they do FHA Loans. Mostof them do.Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

4.) 203k Loans – One of my favorite loan products on the market, the 203k Loan isactually part of the FHA loan program – but with an interesting twist: you canincorporate the repairs into the loan. In other words, if your proposed duplex was 100,000 but needed 30,000 worth of work, you can get an FHA loan that requires just3.5% of the total cost ( 130,000) and finance the repairs into the loan. Like the FHA, the203k loan requires you to live in the property for a year but is applicable for duplexes,triplexes, and fourplexes.5.) VA Loans – If you are a US Veteran, you can obtain a VA loan that requires 0down. Yep, nothing, nada, nilche! To learn more about VA Loans, see W hat is a VALoan .Hopefully this list has given you a few places to start looking for a loan. As I mentionedearlier, referrals from good professionals are the best way to find other goodprofessionals, so ask around! New loans and new loan products are being produced allthe time, so you’ll never know what is out there until you pick up the phone and startcalling.Conclusion: Buying a DuplexAt almost 4,000 words, it’s about time I wrapped this ebook up. However, this may bethe end of the article but it’s just the beginning for you now is when you need to takeaction!Copyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

Go out and find that killer good duplex deal and change your life forever!Your Friend,Brandon TurnerCopyright BiggerPockets Inc, 2015. All Rights Reserved. And by the way you are looking awesome today. Just thought you should know.

bug and knew that real estate investing was going to be my ticket to financial freedom. I read a few books (including Larry Loftis' Investing in Duplexes, Triplexes, and Quads: The Fastest and Safest Way to Real Estate Wealth - which is incredible!) so I knew that