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Plan for Retirement and Buy a Duplex

by Patrick Loo on March 15, 2012

It is almost impossible to buy at the very bottom of the market or to sell at the very top. The fact is, this is an excellent time to buy because home prices are low and interest rates are still at record lows. If you wait for the market to go lower, chances are you may not have the low interest rates and your housing payment will be higher.
This is an excellent time to build for your retirement by buying a rental property. Income property is a great way to plan for your retirement because it lets your money work for you. The combination of lower prices and lower interest rates is creating a perfect situation for positive cash flow.
Modify this search to suit your personal situation. Buy a 2-bedroom x 1-bedroom and live in one of the units. Or buy a duplex with a relative and have them live in one unit and manage the rental in the other unit.
I believe that at duplex is a perfect income property to buy right now. Duplexes are more manageable to live in than a larger apartment building and owning a duplex is an easy way to learn how to manage property. You live at the property, so you can see what’s going on, and you can simply go next door to fix easy problems like a clogged drain.
Duplexes also offer more potential for capital appreciation. Duplexes are not much different than a single-family residence. Many buyers for a single-family home would also consider living in a duplex. A duplex doesn’t cost that much more than a single-family residence, yet the rental income can be close to double the rent for a single-family residence. The bottom line is that you can get a duplex to produce a positive cash flow much more easily than you can get a single-family residence to produce one.
I always liked the words “positive cash flow”, but I think we should simply call it “making money”. I’ve always been a bigger fan about having positive cash flow rather than having a lot of cash in my pocket. Don’t get me wrong, I’d love to have lots of cash, but I’ve always traded in lots of cash for less debt.
While a lot of my coworkers were refinancing their homes to pull cash out of their property, I preferred keeping my loan balances low so that my payments stayed low. What I advise people to do is keep the balance low and get a Home Equity Credit Line, so that if they need the cash, they just write a check. In the meantime, I kept my credit line paid off and used it only in an emergency. I’ve often used my credit line to buy new properties – but then I worked like crazy to pay it off.

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