If you recently read the room mate scenario, the duplex suite scenario is very similar. The only real difference is the rate at which I get to 10 rentals. So if you haven’t read the room mate scenario yet, please read it now and then also read the in-law suite scenario.
In the duplex suite scenario, the first house I buy is actually a duplex, a house specifically built to have two homes with two families living in them. I don’t think this scenario is as good as the first two, because there are fewer duplexes around to purchase, they’re not as easy to sell in the future if you decide to do so for some reason, and the general market of renters isn’t quite as high in quality as renters of single family homes. Nevertheless, it is an option. With this option, I rent it out one side of the duplex for $1000/month, which covers most but not all of the mortgage and maintenance. Perhaps my financial level is such that I would otherwise be paying $1000/month in rent. But now I save that money, after spending some of it to finish paying off the mortgage and maintenance. Perhaps I net $600/month. Round my savings down to $7,000/year.
The numbers and timing from here forward are the same as the in-law suite scenario. Read it again if you need to refresh your memory. Bottom line, it takes about 17 years to accumulate 10 properties, which would be one duplex and nine single family homes. Savings plus earnings (after tax cash flow) at that level would be about $43,000/year, just like the in-law suite scenario. However, I get a little ahead of the in-law suite scenario by time time I’m 66, because that first mortgage was larger, closer to $1200/month than $800/month. So the after tax income from the duplex, after the mortgage is paid off, is closer to $11,000/year than $8,000/year. So at age 66, with five mortgages paid off, perhaps I’m saving or earning around $63,000/year after tax (like $94,500 before tax in the rat race). That’s only a $3,000/year improvement over the in-law suite scenario. That’s why I still prefer the in-law suite scenario, which has more flexibility and a better chance of good tenants.
Nevertheless, just like before, income after all mortgages are paid gets up to about $83,000/year (like $124,500 before tax in the rat race), and this is again a nice sum to live on in later retirement or to will to my heirs. Note that I’d retire much earlier than this, however, while some mortgages still need to be paid off.
What about the quadruplex scenario…
