It seems too good to be true when you get to live in your home and make money with it at the same time. Duplexes range from luxury upscale residences to smaller cottages with only one bedroom for each duplex. One thing you don't want to do is rent or sell one half of the duplex to your in-laws.
Step 1
Stay legal. Research the licenses you need to have to comply with the state, county and city. You may need a business license, real estate license and sales tax permit, depending on how you'll be making money with the duplex. Check the zoning laws and any homeowner's association regulations. For example, short-term rentals of fewer than 30 days may be prohibited in your neighborhood, which means you wouldn't be able to rent the duplex out for a vacation home rental that lasted less than 30 days. Check your mortgage application to see if it has an "intent to occupy" provision. If you said the duplex would be your primary residence, you'll have to occupy one side.
Step 2
Flip the duplex. Buy a worn-down duplex in a great neighborhood. Look for foreclosures or short sales to get a bargain. Inspect the duplex closely to see what improvements or repairs are required. Estimate the repairs and include them in your bid for the duplex. Make the repairs and put the duplex back on the market. Price the residence to cover your repairs, the acquisition price and a good profit.
Step 3
Turn one half of the duplex into a rental and the payment might be enough to pay the entire mortgage. Look in newspapers and online to see what duplexes are renting for. Check with a real estate rental agent. Clean the duplex and make any repairs. Advertise the availability. Offer the renter a lease so the payment arrangements are clear. A lease will probably be necessary if you want to include the rental income in your personal income to refinance the duplex.
Step 4
Turn the duplex into a vacation home rental. Research what other vacation home rentals are leasing for in the area. Search using the keyword phrase "(your city) vacation home rental." Price your rental within the range of similar homes. Sign up with a property management company that does vacation rental homes. The property management company will take care of reservations, cleaning, advertising and check-in for a percentage of the rental price. Or list the duplex yourself on craigslist, homeaway.com and vrbo.com.
