Pros and Cons of Owner-Occupied Duplex Living

I’ve owned my duplex for a little more than three years, and have lived relatively peacefully on the first floor, with my tenants above me. While not an ideal lifestyle for everyone, being an owner-occupant has allowed me not only to become a homeowner much earlier than otherwise possible, but it’s gotten my foot into the real estate business at a time when it’s booming.


  • First-time homeowner mortgages. I bought my duplex with only $1000 down. I was able to get into real estate for virtually nothing, a far cry from the 20% down that many commercial loans require.
  • Subsidize your own housing costs. By buying a duplex, renting out half of it and living in the other half, I was able to be a homeowner for far less per month than if I had purchased a single family house. For instance – when I bought my duplex, the low end for a single family house was about $150,000 (and those were not very nice houses). I bought my duplex for $225,000, and rented it out for roughly half of my monthly expenditure (mortgage, taxes, insurance, utilities, upkeep). Minus my rental income, I’m left essentially paying a mortgage on a $100,000 house — which was pretty much impossible to find (and not desirable if you could find it).
  • Lower insurance costs. Because the duplex is my primary residence, I only need to have a basic homeowner’s insurance policy — not an expensive commerical insurance policy.
  • Qualify for publicly-funded home improvement money. I was able to get city funding to replace the windows on my duplex — up and down. While there are many programs for off-site landlords as well, the program that I participated in (for which HALF of the cost of my improvements is PAID — not LOANED by the city) was only available to homeowners.
  • Self-selecting tenants. I’ve had very good luck with tenants, partly, I believe, because when problem tenants hear that the landlord lives in the building, they decide they’d rather live somewhere else. Also, legally, owner-occupants are given a little more discretion in who they do and don’t rent to — see this post.
  • Repairs and maintenance are easier There’s no travel time, and if I forget to bring my level along, it’s just a trip to the basement. Also, I’ve made a lot of improvements to common areas (hallways, basement, etc.) and the exterior of the house in my evenings and weekends — much more convenient when you don’t have to leave home and travel to another site.
  • Flexibility. Should you decide that owner-occupying isn’t for you, or if you want a larger place, you can move out of your duplex and into another home. You don’t have to worry about selling your house – you simply find renters for it! Then your duplex will be 100% rental property, making your expenditures on it 100% tax deductible (while keeping your low rate 30-year fixed mortgage.)


  • Shared Housing While most duplexes offer more privacy then apartment living, you do still share a yard, and sometimes a basement, front door, and garage with your tenants. I’m fine with sharing my space, but I do feel a little more self-conscious about keeping things in my half of the basement neatly stacked, not leaving anything out in the yard (setting a good precendent), etc. There will also occasionally be cigarette butts in my flowers, bikes chained up to my railing, and the occasional party that lasts until 2 or 3 in the morning. So, if you’re a control-freak, or like your living area to be perfectly silent, it may not be a good arrangement for you.
  • Not all improvements are tax deductible. When I painted the exterior of my duplex, I was only able to deduct half of the cost from my taxes — this is because only HALF of my duplex is rental property — the other half is my private residence. If I were renting out both halves of the duplex, the entire expenditure would have been a tax write-off. Also, any improvements that I make to my living area are not tax-deductible at all. However, any improvements that I make to my rental unit are 100% tax deductible.
  • Self-selecting tenants. Yes, this is both a pro and a con. While having a landlord on-site can turn away many problem tenants, it does also turn away some tenants that would be perfectly fine. Some people fear that an on-site landlord will be overly nosey, always stopping them in the hallway to chit-chat, expect the tenants to be perfectly silent 24-7, etc. When showing the apartment, I make a point of telling them that although I live in the other unit, and expect them to care for and respect the property and neighbors, I don’t have unrealistic expectations of them, and do fully expect them to “live in” the apartment and make it their home.
  • Maintenance could be an issue While I haven’t experienced this personally, I’ve heard that it’s much more likely to get a knock on your door at odd hours of the day for a maintenance problem when you live on-site. And you can’t pretend that you’re not home if your car is in the driveway 😉

My verdict? Owner-occupying a duplex is a great way to get started as a homeowner and in real estate investing. If your current living situation is in an apartment building, you probably will feel like you’re getting MORE privacy by moving into a duplex, while if you’re moving from a single family house you may feel that you’re giving up more. I feel that it’s been a fine lifestyle for me, although I think that it may get old at a certain point. I eventually plan to move out and into a single family house, at which point I’ll rent out both units of the duplex.

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29 thoughts on “Pros and Cons of Owner-Occupied Duplex Living

  1. I just love the title of your blog–it makes me laugh just reading it! Besides being funny, your article covered some interesting points those who haven’ lived in a duplex might not realize. Maybe I should consider buying a duplex!

  2. You’re right about the bad tenets self selecting away when they know the landlord is in the building.
    This is a lot of good info here.
    But do you think this is the best option for a family or someone who is downgrading (would you even consider it downgrading)?

  3. “get a knock on your door at odd hours” – Absolutely Right! The tenants will always come to you with maintenance issues. And if you are onsite then it may happen anytime and often. What a great in site into the pros and cons of being a on site owner.

  4. I think that whether or not its “downgrading” depends on the duplex itself. I’ve seen some duplexes with fantastic “owner’s suites” on the second and third floors that provide a lot of space and amenities.. some well-kept side-by-side duplexes give the feel of a townhome. Many “rental” duplexes, however, aren’t in as good of condition as a lot of single family homes, simply because of the constant turnover of rental tenants through the years.

    In some respects, moving from a single family home to a duplex would seem like downgrading, however, regardless of the home itself. If you’re used to being on the first floor, you may now have to walk up a flight of stairs to get to your living space. Or, if you’re on the first floor, you’ll hear footsteps above you. As well as the noise of vacuum cleaners, sewing machines, and boisterous dinner parties. Your yard won’t be entirely private anymore, and you may need to get through more doors before you reach the great outdoors.

    Of course, none of these are dealbreakers, just lifestyle things to be aware of. There are also benefits, such as less expensive heating bills, and more people coming and going from the house should discourage burglars… and, of course, the financial and tax benefits… which is one of the biggest reasons to buy a duplex, after all…

  5. Never considered buying a duplex until I reed this blog. I can see why buying a duplex could get you into the property game. It would save me a large amount of money thought out the year and make me a tidy fortune.

    Thanks for the article and the comment, it really helps make make decisions based on real life experiences .

  6. Hi, I am 22 years old right now I have a wife a a 2 year old son. I am currently living in a apartment where my rent includes my bills. My dad has offer to help me out with his credit so that I can buy a house. My first thought was “I can’t afford one right now.” Then I started thinking about building a duplex and renting one out while living in the other and using the money that they pay me rent with as part of the mortgage payment. I was really thinking about it and was having my doubts until I read your article. It seems like a good idea, I am about 2 years from graduating as a auto body repair man an my wife just started studying to become a teacher. I guess we can live there until we both graduate at which point we should be able to give a house payment on our own and just rent out both sides of the duplex so that I can finish paying for the duplex and then use the money to pay for my house so that I dont pay so much interest and finish faster.

  7. I bought a duplex in Upstate NY and it was the best purchase ever. Now I must admit, land lording is only for about 5% of the world out there. Dealing with tenants, legal issues, financial issues and everything else can get “interesting” at times.

    MY BIGGEST problem was that the city I live in (it’s a college town) changed my zoning after I moved in. I bought the home as a non-owner occupancy required duplex. My hope was to buy, live in it for a few years and then move out and rent the entire place out. After meeting with a few attorneys, I have come to the conclusion this is an ILLEGAL use of zoning authority; an authority given to the local municipalities by their state’s constitution. For anyone looking to buy a duplex in a primarily single family neighborood….you may want to find out the local law dealing with this issue.

    A recent case heard by North Carolina’s appellate court (their highest court) has deemed this type of zoning restriction unconstitutiional. You can read more about the case here:

    DON’T LET YOUR LOCAL MUNICIPALITY or quiet little single-family neighborhood neighbors (“working to protect the character of the neighborhood”) bully you into thinking they have the right to force you to live in your own home. I’m a young adult who bought this house as a first time home buyer. It was very intimidating dealing with the neighbors and city building department. KNOW YOUR RIGHTS before you buy a duplex. These local zoning laws, which require owner occupancy, have been deemed illegal by a binding state court.

    Duplex Owners 1
    Snooty Neighbor Elitists 0

    Good luck with your duplex purchase…in the end, it was the best purchase I have ever made.

  8. Thanks a lot! It was so nice to hear your opinion on what I have been looking into! Thank for your time. God bless you!

  9. I bought a 2 floor condo and split the insurance with the 1st floor owner. I play the insurance and send him a copy of the bill so he can write me a check. He already owes me last years insurance and has not paid me for this year. He is never at his place and when he is there I have knocked on the door, called him and left letters. Even certified letters that he never got. Now, I have a lawyer involved but I feel like I will never see the insurance money and cannot afford to keep paying his half. What can I really do about this?

  10. I am SO GLAD that i both a duplex!This is the way to start your real estate business, and to have your full time job as well. Is great! Eventually i will by another house and I will be renting both of th eunits and still will make around $1000.00 on top of the fact that my tenants will be paying the mortgage and everything else.
    my advise is ; Look for a duplex as a 1st time home owner.great investmant and has a lot of future in it!!

  11. You wouldn’t have to have an expensive commercial policy if you were renting both units out to tenants. You policy would be a personal lines, “dwelling fire” policy. It’s virtually the same thing as a homeowner’s policy (what I presume you have now), but without any contents coverage.

    As with any kind of insurance, there are always options to add protective components to your policy, such as adding personal property coverage to a dwelling fire policy.

  12. In order to avoid dealing with maintenance issues, one should consider hiring a reputable management company. Management companies market the property, screen tenants, triage & address any maintenance issues and handle evictions.Often for as low as 10% of monthly rent or charge a flat fee for special services. MGMT collects rent from the tenant & provide you with income/expense statements. They should have lists of companies & individuals who perform repairs at a discounted price. All repairs (up to a certain amount agreed upon) will be automatically addressed by MGMT and any repair that exceeds the determined amount will be brought to the landlords attention for consideration. I’m sure other agreements can be arranged for more flexibility.

    Another advantage is the cost of the management company is also tax deductible. =)

  13. I could see this being a good or bad situation depending on your tenants and ones personal disposition. It would be difficult for many to not be intrusive and over critical with the neighboring tenants, however this would be ideal if no personalities conflict.

  14. Thanks for an informative article. We are purchasing a duplex & will be living in half of it. I am an interior designer & we are pretty handy, so the actual thought of improving the duplex does not scare me. It’s the tenants & having neighbors so close that you are responsible for in a way that kind of scares me. You seem to have a common sense & level headed approach which makes me feel better about this adventure we are diving into. Thanks!

  15. Ok I have a questions, so if I will fix and remodel everything inside and out, and also will change water heaters, and AC units on both sides, do I get a tax refund when I do my 2011 Taxes in Georgia? I am planing to rent out both units.

  16. I do still own the place, although I’ve moved out now, making the duplex a non-owner-occupied duplex. It does end up being a bit more of a pain when I need to go there and deal with maintenance issues (it’s not far away, so it’s more of the idea of going somewhere else to deal with things); however, I don’t get nearly as much of the day to day maintenance this way. Thus far, tenants have been good, although I have had a few “getting along” issues between up and down, which was never the case when the landlord was one of the tenants. It’s been an interesting change!

  17. You’ll need to talk to your tax accountant for a good answer on whether you’ll get a refund, but typically these types of upgrades are tax deductible. Repairs are typically deductible in the year they’re made; however, “improvements” (and a large amount of repairs can count as an overall improvement) are generally depreciated over several years.

  18. I’ve bought my duplex last year.Last month we’ve received a mail saying that we have to pay our insurance,which we share with our neighbor.When my husband tried to pay our half, the insurance companies told him that it has to be payed with our neighbor and if he does’t pay, we have to pay his part as well.
    My question is: Is it possible to pay only our half or is there other way to avoid paying our neighbor insurance every year?

  19. Thea,

    I’ve not heard of a situation where insurance is shared between neighbors. Maybe you could look into getting out of this shared insurance situation altogether?

  20. Thank you for your article.
    Is there a book I can pick up to educate myself? I don’t know peep about realestate laws or loans. I’m not against hiring professionals when the times are necessary. But, I need to learn as much as I can before I start this important part of my life.

  21. My family and I have lived in a duplex for the last five years and since my husband and I had credit problems we couldn’t buy anything nicer but with the help of our landlord we purchased it from him a couple days ago but I’m having trouble understanding how to insure it. Our lawyer says that since Montana a recording state we won’t be the legal owners till its on record so we don’t have to rush. Can you give me any advice?

  22. Hi, and congratulations on becoming a duplex owner! Unfortunately, I’m not familiar with the laws specific to Montana; your lawyer will always be the best source of advice.

  23. This is a great article! I am a 27 year old prior service Soldier. I have THOUGHT about buying a duplex in the past but as I get older now I actually WANT to do it. I have NO EXPERIENCE whatsoever in this. I don’t know anyone who does it and am a little scared of losing all my money. I live in Texas and would probably buy a place in the 254 area. Is there any websites/books/people you specifically went to when you first began? I don’t even know where to start and want to do everything the right way. After reading this, I really am inspired to make this happen. I’m ready to do this- alone.

  24. We have owned a duplex on a North Carolina beach for over 12 years in a partnership that began after a conversation at the kids’ school bus stop. Both couples had a passion for beach vacation property but couldn’t really swing it on their own.

    When this unit with 3 bedrooms and 2 baths on each side came on the market, they realized that the could share expenses and have the option to swap weekends to have plenty of space for extended family and friends!

    We need to sell for health reasons, but we’re still educating people about the many benefits of duplex ownership either as an owner/landlord or in a partnership!

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