Homes come in many shapes and configurations, and one type that’s popular with extended families or budding landlords is a duplex. But just what is a duplex? It’s not just one home, but two. They may be stacked one atop the other on separate floors, or they may be side by side with a shared wall. A duplex may also be called a “multifamily dwelling,” because more than one family can live in it.
A duplex is sometimes confused with a “twin home,” but they’re not the same thing. A twin home may look like a duplex: two separate homes sharing a wall. But with a twin home, the lot line actually runs through the common wall—so on each side you have an individual home on an individual lot, even though they’re connected.
A duplex is different: Rather than owning just one home, you own two. As such, duplexes will likely cost more than a single-family home at the outset. However, if you rent out the other half, this revenue can drastically offset your expenses and potentially make duplex living cheaper than what you’d pay for a freestanding house. It’s a popular option for people who want to keep family members nearby or who want a steady income from a place that’s not too far away to manage.
The upsides of a duplex
A lower cost: On average, living in one side of a duplex (while renting out the other side) is more affordable than living in a single-family home with a similar number of bedrooms, bathrooms, and square footage, according to Duplex.net.
Help with mortgage payments: Let’s say your monthly mortgage payment is $1,700, and you rent out the other half of your duplex for $900. You’ll need to come up with only $800 each month to make the payment. Or you could pay off your mortgage even faster by making extra payments on the principal.
Tax deductions: Unlike with a single-family residence, with a duplex you can deduct certain home expenses for maintenance and yardwork because it’s an income property. That can make upkeep easier to afford. Just to be sure, check with a tax pro before you make an offer on a particular property, because specifics always vary.
You can keep family close: If your family includes someone who is elderly, has special needs, or is just starting a new career, he or she can stay in the other half of the unit. The family member can maintain a degree of independence while not going too far from the nest.
Security: There’s always someone nearby in case you need help, or to watch over your place while you’re gone.
You set all the rules: The advantages of being a landlord include getting to set all the rules when it comes to pets, smoking, and landscaping. Note, however, that being a landlord also has its downsides.
The downsides of a duplex
Your tenants live right next to you: This could potentially be awkward if they’re knocking on your door at all hours with requests or complaints.
You’re responsible for all maintenance: Anything that breaks, the way the yard looks, utility issues—you have to take care of it all. Being a landlord may not be easy.
Renters are not guaranteed: If the rental market is soft, it can take time to find ideal tenants. If you don’t have renters lined up, you’ll have to make the entire mortgage payment yourself.
Privacy may be an issue: You could be sharing a floor, ceiling, or wall with another person. You’ll have to deal with all the noise, smell, aesthetic, and parking issues that come from living so close to someone else.
You’ll have to deal with damage: No matter how carefully you’ve selected your renters, no one ever takes care of someone else’s property as well as they take care of their own. Stuff happens, and you’ll have to sort it out.