Several years ago, I sold my luxury home on Campbell Lake and moved downtown into a new duplex. I live upstairs with my husband and two poodles. On the first floor is a 1,200 square foot apartment that over the years we have rented out to an airline pilot, a slope worker, a UAA student (with support from her parents), a CPA in life transition, and a young petroleum engineer who walks to work. Owner occupied duplexes, particularly newly built ones, are hard to find in today’s market because most of the land zoned for two family units has been eaten up over the past ten years by duplex condos. Yet the idea of an owner occupied duplex fits several emerging buyer groups. They are not just for aging baby boomers like myself who want to get away from the expensive upkeep of 4,000+ square foot home, high utility and tax bills, and the keeping up with the neighbors on landscaping, lawn care, and Christmas lights. Plus, there is the peace of mind that someone is looking after your property while you take that vacation to Hawaii or snow bird in Arizona.

Duplexes are also an excellent idea for first-time homeowners. Many a real estate investor career has been launched with an owner occupied duplex. Owner-occupancy is required for at least one year and then young investors can move on to another property, whether it is another duplex, fourplex or single family home. Multi-generational families can also benefit by owning a duplex. Grandma is close, but not too close. So is that somewhat pesky mother-in-law. Then, there’s the mother and adult daughter combo. Close, but not too close, for all the same reasons. Millennials and baby boomers, the two largest demographic home buying groups, can both benefit from owning a duplex, either as a first, or last, real estate investment.

After all, what better idea in real estate is there than to have a tenant contribute to your monthly mortgage payment? Rents are high in Anchorage right now and the vacancy factor is low, making the risk of negative cash flow almost impossible to imagine. Brand new duplexes also offer peace of mind over unexpected maintenance and repairs for those older units built in the early l980s. Although only 75% of the tenant’s market rent can be used as income towards qualifying for the mortgage, in reality the tenant rent assists 100% towards the homeowner’s mortgage. Loan limits for duplexes range from $500,550 for FHA to $800,775 for VA, Fannie Mae, and AHFC financing. VA does not require a down payment unless the loan amount exceeds $625,500. AHFC is most likely the best mortgage option with a 10% down payment and six months of reserves, including principal, interest, taxes and insurance, if the tenant rents are to be counted towards the homeowner’s income.

Brand new duplexes will be expensive, but they should not be compared to older units built in the l980s when most duplex and fourplexes were built in Anchorage. Land, street and utility costs have doubled since that time. Duplexes are also going to be more expensive than single family homes on a square footage basis because they have twice the number of bathrooms and kitchens which are the two most expensive rooms in any home. However, looking into Anchorage’s future with the critical need for more housing, owning a duplex seems like a safe real estate investment for a small investor or home owner.