Advise me on buying a rental property

[High Plains Drifter 11055]

 

Thinking about buying a duplex (zoned commercial). One side is an efficiency, one side is a one bedroom. Basically, an older house that has been subdivided. Currently being used as an AirBnB. Wife would use one side as her law office (she's been renting a different space, but her lease is up Jan 1 and the landlord is raising the rent), the other side we would rent out long or short term.

Great location. Pretty sure we could rent out the other side with no problem. From the pics on the realtor website, looks to be in good shape, although it is an older house. New metal roof, pier and beam foundation. Nice backyard, small lot. Going to look at it this weekend. Its been on the market for a while, price has been dropping, I think we can get a good deal, but the current high interest rates are a concern.

Some questions:

Best type of loan? Small Business Loan or something else? We currently have no debt, house and cars paid off, zero credit card debt.

Long term rental for the other side, or continue as a short term rental?

Tax issues or benefits?

What am I missing/forgetting? How am I going to fuck this up or get fucked?

 

 

 

[UTPhil2006 3828]

9 hours ago, High Plains Drifter said:

 

Thinking about buying a duplex (zoned commercial). One side is an efficiency, one side is a one bedroom. Basically, an older house that has been subdivided. Currently being used as an AirBnB. Wife would use one side as her law office (she's been renting a different space, but her lease is up Jan 1 and the landlord is raising the rent), the other side we would rent out long or short term.

Great location. Pretty sure we could rent out the other side with no problem. From the pics on the realtor website, looks to be in good shape, although it is an older house. New metal roof, pier and beam foundation. Nice backyard, small lot. Going to look at it this weekend. Its been on the market for a while, price has been dropping, I think we can get a good deal, but the current high interest rates are a concern.

Some questions:

Best type of loan? Small Business Loan or something else? We currently have no debt, house and cars paid off, zero credit card debt.

Long term rental for the other side, or continue as a short term rental?

Tax issues or benefits?

What am I missing/forgetting? How am I going to fuck this up or get fucked?

 

 

 

Will follow up and you a DM as well but I’ll answer your questions here too

Loan - investment conventional loan. Runs a little bit higher than your standard primary home loan but not too bad and we get good rates on them. This will likely be much lower and more favorable than anything else. 
 

As for LTR vs STR - my guess is with your wife working on half of it, a consistent (and quiet) tenant is going to be worth their weight in gold vs having people shuffle in and out constantly. 
 

Tax benefits I’ll let a CPA, etc chime in on those 

 

Only other things I can initially think of off the bat would be make sure the HOA, etc is okay with your wife running a business out of one side so that you don’t have a Michael Scott Paper Company situation on your hands. 

[Gil Bang 26099]

Not only HOA, but local municipality.   Does zoning allow that particular use? 

 

Long term-vs. Short term:  Phil makes a good point about a quiet tenant vs. a party scene, but your wife being next door M-F 9-5 is almost ideal for short term.  It's really a question of what income will it produce as a short term vs. perm. tenant. 

But yeah, your wife trying to do business while somebody next door is blasting gangster rap is less than ideal. 

Edited November 16, 2023 by Gil Bang

[nbmishoid 976]

If all goes well, you will live to regret it 

[closetohumping 17547]

Don’t. 

[High Plains Drifter 11055]

Finally looked at the house. 100 years old. Needs new roof and has foundation issues. Pass.