Buying a Duplex 20 Years Ago Instead of a Starter Home Set Us Up for Life—Why It Makes Even More Sense Today

When my wife and I graduated from college, we were broke, just married, and about to become parents. We were staring down her student loan and earning entry-level salaries. 

The conventional wisdom was clear. We had two full-time incomes. The world was telling us to stretch our budget and buy a starter home, leaving little room to save, invest, or absorb surprises.

The math didn't sit right, so we chose the path less traveled – celebrating the joy of family in other ways while investing in our future by purchasing a duplex.

By living in one unit and renting out the other, we dramatically reduced our housing expenses, trading status for stability and investing in our future.

Rental income from the other side covered most of our housing expenses, and we lived frugally as my father had taught me. In three years, we saved enough to build a lovely home in a good school district, and we kept our duplex as an investment property. 

Fast forward two decades, and we sold the duplex. After years of rent and appreciation, we are walking away with roughly $200,000 after taxes paid. 

We put very little of our own money into the property over that time, probably less than $25,000. Between what we made from our duplex and saved in 529s, it is enough to cover our kids' college education.

If faced with those same circumstances today, choosing that same path all over again makes even more sense. Housing affordability is a real challenge in the U.S. 

If you’re a first-time home buyer, now, more than ever, is the time to consider purchasing a multi-unit residential property. Inflation-adjusted housing prices are far higher than they were 20 years ago, but you can find duplexes that make financial sense.

Here are nine practical factors to consider if I've piqued your interest.

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Related: Join subscribers for ideas to manage money and the home as a team.

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1. Do the Math

The purchase price and rent can break you. If you overpay or can't generate enough rental income, you’ll be swimming in debt. And getting out from underneath it can be a challenge because it’s often harder to sell an investment property than a traditional home. 

2. The Financing Rules Are Different 

Owner-occupied duplexes usually qualify for lower down payments and better interest rates than pure investment properties, as long as you live there for at least a year. We obtained an FHA loan with 3% down because it was our first residential purchase; commercial loans typically require a 20% down payment.

3. Consider Your Learning Curve

I grew up watching my father manage rental properties on the side. I mowed lawns, met tenants, and learned early that housing could be more than a place to live. My learning curve wasn’t steep. Consider yours. 

4. You Need the Safety Net of Cash Reserves

Even if the rent “covers the mortgage,” you still need cash for repairs (roof, HVAC, plumbing), vacancy between tenants, and unexpected life expenses. A good rule of thumb is to set aside 6 months of total housing costs.

5. You’re a Homeowner and a Landlord on Day One

Owning rental property isn’t passive income. You’re responsible for maintenance calls, rent collection, and upkeep. Living next door to your tenant adds emotional complexity that most first-time buyers underestimate.

6. Treat Your Renters How You Want to be Treated

My wife and I took turns fostering relationships with our tenants. We treated them as we expected to be treated, respecting our property as their home. 

7. Purchase Umbrella Insurance

An umbrella insurance policy is a type of personal liability coverage that provides coverage above and beyond what regular home insurance offers. 

8. Have a Good Handyman (or be one)

If you're not handy yourself or don't have the time to fix the odd jobs that pop up, have a good handyman you can turn to at a moment's notice. 

9. Screen Tenants Well

Tenant screening protects both your finances and your family’s peace of mind, especially when you live next door. A strong screening process reduces the risk of late payments, property damage, and ongoing conflict.

Professional Support

If you want help thinking through big financial decisions as a couple, I support partners who want to manage money and the home as a team. You do not have to navigate these choices alone.

I'm the only Accredited Financial Counselor® and Fair Play Facilitator®, empowering high-achieving couples with systems to manage money and the home as a team — drawn from decades of national leadership and lived experience.

Click here to schedule a free 15 minute exploratory call.