Should You Sell or Keep Your First Duplex?
Someone emailed me recently with a great question about their duplex:
I bought a duplex five years ago with 3% down. One unit is rented and the other has been my primary residence. My interest rate is 2.8%. I do not need the equity from the duplex for my next home purchase, but I estimate I could walk away with about $300,000 if I sell. If I decide to rent both units, I think I could make about $600 a month after all expenses. The duplex is in a popular area and I found my last tenant in under two days. I do not plan to buy more rental properties. I could use the second unit as a flex space or home office, but I am wondering if I should just sell now. What would you recommend?
Here’s what I told them about how to turn one duplex into long-term wealth:
The Case for Keeping the Duplex
Keeping this property might be the smartest financial decision you ever make.
You have a 2.8% interest rate. That alone is a huge reason to hold. Money has rarely been cheaper, and you are not going to see rates like that again for a long time.
On top of that, your duplex is desirable. You found a tenant in under 2 days. That kind of demand means steady income and less time sitting vacant. When both units are rented, you are looking at $600 per month in positive cash flow. Over time, as rents go up and the mortgage stays fixed, that cash flow only improves.
This duplex can also grow your wealth over the long term. You are building equity, your tenants are helping pay down your mortgage, and you are positioned to benefit from market appreciation. There are also tax benefits that come with owning rental property. You do not need to be a full-time investor to benefit.
Reasons You Might Sell
Selling would unlock around $300,000 in equity, which is not insignificant. If you wanted to invest that money elsewhere or use it toward other goals, selling is an option.
You also mentioned that you do not plan to own other rental properties. If you do not love being a landlord or do not want to think about home maintenance, selling might bring peace of mind.
Looking ahead, you mentioned the roof and windows will need to be replaced in the next five to ten years. That is a real cost to consider, though not urgent right now.
My Advice
Keep the duplex.
You do not need the cash, you have a dream interest rate, and the rental market is in your favor. Even if you only keep it for a few more years, you will likely see appreciation and continued income.
At the same time, I always recommend doing the following:
- Set aside reserves for future repairs
- Talk to a property manager if you want help handling tenants
- Stay in touch with a real estate attorney or CPA for advice on taxes and planning
If you ever want to revisit this decision, do it in a year or two. Markets change and your needs might too. But for now, this property is working for you.
If you are in a similar position and not sure what to do with your first property, I am happy to connect you with a vetted real estate agent or advisor in your area who can walk through the numbers and help you feel confident in your decision. Reach out. I am always happy to help.
