A duplex, a triplex, and a quadplex (or fourplex) are multi-unit properties offering opportunities for homeowners and investors. Whether you plan to live in one unit and rent the others or just want a steady stream of passive income from rentals, these multi-unit properties are versatile. They often qualify for financing with lower interest rates and down payments. I’ll differentiate duplexes, triplexes, and quadplexes, weigh the pros and cons, and provide alternative investment property options.
Defining a Duplex, Triplex & Quadplex
Before purchasing an investment property, it is essential to clearly understand what a duplex, triplex, and quadplex are compared to other investment properties. They are all considered multifamily properties and are great investments that can generate a handsome profit.
However, unlike complexes and condos that share a common entrance, duplexes, triplexes, and quadplexes have separate entrances for each unit. These multi-unit properties also come with various floor plans and have many names, like doubles, triples, over-and-under, or fourplexes.
What Is a Duplex?
Duplexes make great starter homes using rental income to cover some expenses. Some duplexes are symmetrical, but others have two different floorplans with separate entrances. These properties typically share a wall, or the apartments stack on each other. Duplexes don’t have an interior connection between units like mother-in-law apartments that connect to the main home.
Buying a duplex is a good option for families and first-time homebuyers who benefit from the additional rental income. It’s also excellent for new investors who want to start with a smaller property. With rent coming from two units, there will be some income when one tenant leaves. However, living in a duplex vs triplex while renting the other unit has some risks. If the tenant moves out, there is no longer any rent from that unit to pay expenses.
What Is a Triplex?
What is a triplex home? It’s an investment property with three separate living units and can be one or more stories tall, depending on its layout. Triplexes often connect to other buildings and units, like row houses and townhomes. Investors looking to buy their first rental property often choose triplexes because the higher rental income offsets some risks of losing money from vacancies.
Triplexes are ideal for residential real estate investors who want higher rental income and less risk of vacancies, especially during a market cycle shift. Triplexes can be owner-occupied, with the other two rents covering property expenses or strictly for investment. It’s a good house hacking strategy because of the lower downpayment required when investors are living in the building.
What Is a Quadplex?
The difference between a duplex vs a quadplex is that the units double. A quadplex has four units, each with separate entrances. As the number of units increases, the management demands also increase. There are more tenants to manage and more maintenance. However, buying a fourplex can generate a high profit and minimize the risk of income loss from vacancies.
Quadplexes are excellent for investors who want to buy residential multifamily properties with higher income potential from more units. They’re also excellent owner-occupied properties for living in the unit for a year before moving into the next investment property—an intelligent move if you’re waiting for the best time to buy a house. This house hacking strategy helps you qualify for homeowner loans with lower down payments, rates, and longer terms.
If you want to decrease your management responsibilities, Avail can help. It’s a free property management that simplifies rent collection, tenant screening, maintenance tracking, and listing your rental properties on numerous popular websites like Apartment.com and Realtor.com.
Differences Between Duplex vs Triplex vs Quadplex
Other than the number of units and earning potential that separates each type of “plex,” there are other legal reasons differentiating a duplex, triplex, and quadplex. In almost all cases, federal occupancy standards allow two people per bedroom, and state codes may allow more.
Under this federal code, a triplex with three single units would legally house a maximum of six tenants; a fourplex in the same scenario would house up to eight. However, a duplex with three or four bedrooms per unit could house 12 to 16 tenants.
Investors must understand this to buy a duplex or larger and manage fewer tenants with normal wear and tear on the property. Fair housing laws don’t allow landlords to stipulate fewer tenants per unit, except under limited circumstances.
If you want to buy a duplex, triplex, or fourplex, check out Zillow, an online real estate marketplace that lists properties for sale. For free, choose and evaluate market data, property values, preforeclosure, foreclosure, and for sale by owner (FSBO) properties.
Pros & Cons of a Duplex, Triplex & Quadplex
Now that you know what is a triplex, duplex, and quadplex, let’s dive into their advantages and disadvantages. The pros and cons are the same because they are all considered multi-unit properties and come with opportunities and risks. Carefully evaluating these pros and cons can help you decide if residential real estate investing is right for you or better suited to commercial or other types of real estate investing.
One of the benefits of buying triplexes and larger multifamily investment properties is that they save time and money. For example, if you own three single-family homes, you have three rents and three properties to maintain, but if you own one triplex, you still have income from three units, just like you would with the singles, but you only have one property to maintain. Other pros and cons of buying these types of include the following:
| Pros of Owning a Multi-unit Property | Cons of Owning a Multi-unit Property |
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Owning residential multiplex rental property is a great way to build a portfolio and learn to evaluate potential properties. You’ll gain valuable experience as you arrange financing, market vacancies, maintain the building, and screen and manage tenants. You’ll also build equity as you improve the property and continue to pay off your mortgage.
One of the biggest challenges of residential investing is when the property is also your home. You’ll live close to your tenants, and they won’t hesitate to knock on your door at any hour. Set clear expectations and boundaries to abide by and write them in the lease. Also, while there are tax benefits, if you don’t keep the property for 27.5 years, you’re subject to depreciation recapture and end up paying a hefty sum of your profits from the sale to the government.
To lessen the interruptions from renters, TenantCloud, a cloud-based property management software, can manage your communications, screen tenants, manage your lease agreements, and collect rent. It can also handle your maintenance request so that you can schedule electricians, plumbers, and landscapers right from the platform.
Each time you sell an investment property, you can reinvest the equity in another without paying capital gains using the IRS code 1031 Exchange (1031E). Building equity and wealth while tenants pay the bills.
Alternatives to a Duplex, Triplex, or Quadplex
There are alternative residential investment properties that differ from buying a triplex, duplex, or quadplex, which are also viable options for building your real estate portfolio. You can invest in just one type of property or diversify your portfolio with a mix of different kinds of homes. Here are some other residential real estate investments to consider:
- Single-family homes: Single-family properties can be short- or long-term rentals. Single-family tenants often pay for maintenance and repairs and treat your home as their own.
- Turnkey real estate: Turnkey properties come fully rented with qualified tenants and generate income immediately. Some include property managers, which is great when buying out-of-state investment properties.
- Apartment complexes: Buying a multiplex apartment building involves more than multifamily properties. It has fantastic earning potential, higher costs, and maintenance demands, so hiring a property manager or on-site staff is crucial.
- House flips: Involves buying, renovating, and reselling properties for profit. Risks include unforeseen costs and delays. Fix-and-flips require careful evaluation because there’s a high risk of losing money.
- Vacation rentals: Vacation rentals are ideal for investors who don’t want to manage long-term tenants. Short-term vacation rentals allow you to generate income and minimize property wear and tear.
Frequently Asked Questions (FAQs)
Is buying a triplex a good investment?
Absolutely! Getting a triplex is a good investment since you’ll have three units, which means more rental income. If you want to know how to buy a triplex, start by scouring homes for sale and filter your search by typing in “triplex” in the keywords field.
What is the difference between a duplex and a 4-plex?
The difference between a duplex vs a quadplex is the number of units. A duplex has two units, while a quadplex (or a fourplex) has four. Both are multifamily units, but a fourplex has more income potential than a duplex. Still, a duplex is easier to manage than a fourplex.
How does a townhouse differ from a duplex and triplex?
Townhouses give more of a single-family home vibe, with shared walls but separate yards and entrances. On the other hand, duplexes and triplexes are just single properties split into multiple units but are all owned by one investor or landlord.
What is the difference between a duplex and a 2 flat?
A duplex and a 2-flat are the same but are used differently in certain cities. For example, a duplex is commonly known as a 2-flat in Chicago. Duplexes generally have two side-by-side units or stacked floors, while 2-flats are only recognized as two units stacked vertically.
Bringing It All Together
Duplexes, triplexes, and quadplexes are multifamily residential properties but differ in size, responsibility, and profitability potential. Whichever property you decide to invest in, weigh the advantages and disadvantages so you can benefit from a lucrative investment. Can you now differentiate what is a triplex, a duplex, and a quadplex? Do you own a duplex, a triplex, or a quadplex? Share your experience in the comments!
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