Houses come in different types. If you’ve developed an interest in real estate either as an investor or homebuyer, you’ll want to know which category the house you want belongs to. So, is a duplex considered multifamily?
Duplex is multifamily because it has 2 housing units. It’s great for the additional revenue, tax benefits, suitable for joint families, etc. But there are cons such as extra responsibilities for tenants and landlords, nuisance from neighbors, high costs, and difficulties finding buyers and tenants.
If you’re investing in a duplex, it’s important to know that it can either be side by side or stacked. Also, it’s best if both units are completely independent of each other. Here, we discuss whether duplexes are multifamily.
What is a Multifamily?
A multifamily house is a property that contains more than one housing unit. It’s a building where more than one family is living independently. Since duplexes consist of two housing units, it’s a multifamily home. There are several other types of multifamily houses. These include townhouses, condominiums, mixed-use, etc. Usually, once the building has more than 4 units, it’s considered a commercial property. Multifamily houses are a major real estate investment. Whether you live there or not, you’ll have to consider the tenants.
What is a Duplex
A duplex is a house that consists of two housing units. It could be a two-story building with each floor containing a different unit. The two units can also be side by side, in which case they’ll share walls. Since the units are independent, they have different entries and can house different families. Duplexes make for a great real estate investment because it’s possible to live in one part and rent the other part to a different family.
Types of Duplexes
It’s easy to get confused when trying to know whether a duplex is a multifamily house. This is because of the variety of duplexes that exist. In some cases, some people will refer to single-family homes as duplexes. However, here are the two common types:
1. Stacked Duplex
The stacked duplex is a two-story building with two housing units. Each house has its entry and can be home to different households. This is what makes it a multifamily house. But there are few cases where a two-story house can be a single-family unit. The lower floor consists of the living room and kitchen, while the upper part consists of the bedrooms.
2. Side by side Duplex
The two housing units are separate flats or apartments with a common wall. They’re both on the ground floor. Side by side duplexes could share a direct wall or have the garage serving the two housing units in-between. This is better as it’ll minimize any disturbance from the two units.
Advantages of Duplexes
A multifamily unit such as a duplex can have several advantages for the owner. They include:
1. Revenue Benefits
The major benefit of owning a duplex is living in it and still renting it out. Since there are two housing units, you can have another family living in the other unit. This source of revenue allows you to increase your returns on investment and make the most of the property. Even if you move out of the property into a single-family home, you can rent out your unit and earn rent.
2. Manage Your Investment More Efficiently
As a house owner, owning a duplex allows you to manage your property more efficiently as you’ll be living next door. You can monitor your tenant’s use of the property and notice any repair issues that may come up on time.
3. Tax Benefits
You’ll also enjoy some tax benefits when you own a duplex. You can write off part of your home maintenance costs as a business expense. It’s also possible to prorate part of your mortgage interest payments. You can deduct part of the interest you pay on the mortgage from the rental income before paying taxes on the rest.
4. Good for Joint Families
Do you have a family friend you’ve been with for ages or a close family member? Adulthood doesn’t have to separate you because you could get a duplex. Each family will live in separate units. It’s a good way to stay close with families or friends without intruding on one another’s privacy. This makes it perfect for multigenerational families that want to stay together.
Disadvantages of Duplexes
There are disadvantages to owning or living in duplexes too. They include:
1. Disturbances from Neighbors
The shared walls between the two housing units mean that disturbance from one unit can affect the other. Whether it’s a two-story unit or a ground duplex, having noisy neighbors in a duplex can be annoying.
2. Difficulty In Finding Tenants or Buyers
Another issue that could come up is finding tenants. Duplexes are a bit tricky. They’re not regular apartments or single-family houses either. This limits their target market. Most times, duplexes are in the suburbs, which means young couples and those that like to live in multifamily apartments may not want to move that far from the city center. Families who want to live in the suburbs will also want single-family homes to have more privacy. However, this doesn’t mean you won’t get tenants.
It’s also more difficult to sell a duplex than if you’re trying to sell a single-family house. Since you’re selling two houses, anyone who wants to buy it will likely be an investor who’ll use it as a rental property. But you may be able to sell the unit separately if they have different titles.
3. Extra Responsibility
As a tenant living in a duplex, you’ll have the same responsibility as living in a house. This means that you have to do the yard work, house maintenance, cleaning, etc. This might feel like a lot of work compared to apartments where the homeowner association handles everything.
4. High Cost
The upfront cost of getting a duplex is a big challenge. It’ll cost more than a single-family home. So, if you’re buying in a market where homes are expensive, it’ll cost you a lot more.
5. Responsibility as Landlord
Being a landlord is also a major duty, even if you’re living on your property. The fact that you live close to your tenant could mean more disturbance. They can knock on your door anytime to complain about some repairs or maintenance. You’ll also be negotiating leases, screening tenants, etc., and dealing with tenants on late rents, noise, complaints, etc., could also be an issue. The mortgage also remains your responsibility. So, if the unit is vacant or the tenant defaults on rent, you still have to pay it.
Duplexes are multifamily houses. They’re quite great and offer you a lot of options. But it’s important to consider the pros and cons of owning one before buying it. That will let you know if it’s the right decision for you.