Want to build your very own investment property and live in it essentially mortgage-free? That sounds appealing at first glance but perhaps a bit confusing when you sit back for a bit. How can you live in an investment property, doesn’t living in it also mean it’s your primary residence? Yes.

And if you’re thinking of building a brand new rental, why not build it and provide your own space as well? Hey, it’s your space and your design and as long as you’re conforming to local ordinances why not consider it?

We’re talking about building a duplex and the idea needs some serious consideration. A duplex will have separate living quarters and share an interior wall which divides the living quarters while at the same time each side having its own utility meters and hookups. Let’s see how that might work.

Say you decide to build a brand new duplex that covers about 3,500 square feet, each side taking a 1,750 foot share. You get your plans and specs ready when you find out that you can build the duplex for about $250,000. And since you’re going to occupy one side of the investment property it’s considered your primary residence and you don’t need to have the typical 20 or 25 percent down payment that a non owner-occupied loan requires.

You determine that the permanent mortgage amount of $250,000 will have monthly payments of $1,600 based upon a 30 year, 4.75 percent mortgage plus taxes and insurance. You find that similar 1,750 square foot rental properties rent at about $1.50 per foot and since your property will be brand new, you can expect to get that or even more. Your rent will then be $2,700 leaving you with a positive cash flow of $1,100.

These numbers will vary based upon the situation but that’s the math on how to build a brand new investment property, live in it and have your tenants make the payments for you. Don’t automatically think single family home when building new—there are other options that make a lot of sense.