Networking & Communications

Full Duplex

Should your First "House" be a Duplex?

There is a lot of talk about getting your first house. Its part of the American Dream to get a house and maybe get a dog named Rover. But maybe someone's first house should instead be a duplex. Why would I propose such a thing. Is it possible I am a secret russian spy that hates American pie. No their are simply to many advantages to buying a duplex first

Buying a duplex has a number of financial advantages over buying a house. Alot of people assume that in a particular neighborhood duplexes would sell for about twice of what a house sells for. This is rarely the case. Duplexes are more frequently about 1.5 times the price of a house in a given subdivision. So to pick an easy number if a house is selling for 100k then a duplex should be selling for 150k.

So lets compare the two. To keep things the same lets assume we have 20k to put down and we are looking in the Austin real estate market so that the taxes are .025 percent of the purchase price and insurance is .004 percent of the purchase price.

- Lower Monthly Payment

To start off with lets look at the house. For the house we are going to have a 6.5 percent interest rate.

100k house price
20k down payment

Monthly Payment = $747.32

Moving on to the duplex. Since duplexes usually have higher interest rates we are going to assume a 7 percent interest rate. We are also going to assume that the other side of the duplex is being rented for $650.

150k duplex price
20k down payment

Monthly Payment = $1184.18
Rent Payment minus 5 percent vacancy = $617.50
Monthly Payment minus rent = $566.68

The monthly payment on the duplex comes out to be 31.8% less than on a house. You might get different numbers based on your area. In most areas a duplex leads to a lower monthly payment but there are a few real estate markets where the opposite is true.

- Increasing Your Future Real Estate Purchasing Power

Besides the advantages due to a lower mortgage payment there is another advantage over buying a duplex first. Buying a duplex first allows you to make additional purchases while buying a house first can negate your ability to buy additional properties.

To understand why this is the case we need to understand a few rules about how banks determine whether or not to provide loans. When you are purchasing your first investment property banks will usually not count the rent as income unless you have owned investment properties for over 2 years.

So if a buyer first buys a house and then wants to buy a fully rented duplex they will need to be able to qualify for the full price of the house and the duplex combined. This can be difficult for someone in the beginning stages of their career. If a buyer first purchases a duplex first in 2 years when they are looking for a house they can count the rent from the duplex as income which can help them qualify for the house purchase.

- Faster Payoff

Another interesting way to look at it is that if instead of simply spending the saving you incurred by owning a duplex if you were to pay off your mortgage faster. So if you applied 747.32 to your house it would take 30 years to payoff. But if you paid your duplex of $566.68 and then took the additional 180.64 and applied it to your mortgage you could pay off your duplex in 18.5 years. So in 18.5 years you would have a $150k duplex paid off instead of a $100k house partially paid off.

- Greater Benefits of Mortgage Payoff

Not only will you pay off your duplex faster but once you paid if off you will be in a better position. Once you pay off your house you are living mortgage free but not payment free. Based on the original assumptions (Austin Texas 2.5 percent tax rate and .4 insurance rate) you are still making a payment of 241.66 a month for taxes and insurance. In contrast once the duplex is paid off you are not only living in your duplex for free you are actually getting a profit of $255 a month.

Buying a duplex is not for everyone. Some people do not want the hassle of managing a property. And our article is not proposing that everyone should buy a duplex. We are simply showing the financial benefits of buying a duplex.

About the Author

If you are looking to purchase a home or duplex in the Austin Real Estate market Ki can help you in your search. Ki is an Austin Realtor with a long history of helping clients purchase personal and investment properties. His website has a search of the Austin Homes.

Can someone tell me the key diference between a half duplex and a full duplex radio system?

Any telecom guru can help please ... some books I've read end up confusing me!

Starting from the basics: A duplex radio architecture uses two separate frequencies for transmit and receive. That is, radio unit A would send information to radio unit B on frequency F1 while unit B will send to unit A on frequency F2.

The difference between half- and full-duplex radio systems lies on how information is transferred between the 2 units. In full-duplex, both unit A and unit B can be sending and receiving information simultaneously without impeding each other. The half-duplex, however, is similar to the simplex system in that only one unit in the communication link can transmit at any time, but two frequencies are used instead of just one.

Full Duplex Live @ HMH Amsterdam 09-02-'08