Annualized cost comparison between a Condo and an Owner-occupied duplex (part 1)
It’s the premise of SeniorLandlord.com that being the owner-occupant of a multi-family property is a better choice than owning a single family home or condominum. As many of us approach our retirement, we don’t need the extra bedrooms that we had for the kids, nor do we want to pay the expense to heat, cool insure and maintain a home that is vastly larger than one or two people need. So downsizing to a condo or apartment is a popular choice. Here, I try to make the point that people should consider being an owner-occupant landlord by presenting a sample comparison of the costs associated with a condo and a common side-by-side duplex. Readers are welcome to reach out to me with questions!
Below is a spreadsheet that illustrates a basic cost comparison between owning a condo and owning a duplex (and living in one side and renting out the other). I have used the current mortgage rates as of Jan 2025 and assumed that the buyer has $300,000 in equity to use, possibly from the sale of a previous property. I have used actual data from local properties in Denver CO.
This spreadsheet shows that owning a duplex has significantly better cash flow ($9,000 per year better) than a condo. Additionally, the duplex appreciates in value significantly better than the condo – and I assume 3% price appreciation due to inflation. For individuals looking at the long term, a duplex, triplex or quad-plex may make sense. Additionally, there can be depreciation on the building to shelter taxable income. The owner-occupant of a condo or single-family home cannot depreciate the building. However, the IRS allows partial depreciation of an owner-occupied multi-family building – more details will be provided in part 2 of this article. Be sure to sign up for the newsletter to receive notification of the publication of future articles and videos!
Disclaimer: this spreadsheet is provided as an example. Real estate prices and rents vary widely by location. I used data from the Denver area – your neighborhood may differ greatly. You should obtain data from the local MLS as well as Zillow and other websites to do your own comparison.
Mortgage rates will vary by applicant based on interest rates as well as borrower credit score. There may be programs offering better rates, so call several mortgage brokers in your area!
A copy of this spreadsheet is available for download on the website.
Nothing on this page is intended to be financial or legal advice. Users should consult with accountants and attorneys who specialize in multi-family properties.