A guide for choosing between a duplex and a triplex

Choosing between a duplex and a triplex requires you to examine your needs, budget and the pros and cons of each type of real estate.

The main difference is clear: A duplex has two units within the structure, while a triplex has three units. However, it can be difficult for potential landlords and homeowners to decide between the two. A careful assessment of your needs makes this issue much less of a hassle.

A guide for choosing between a duplex and a triplex

What purpose does the property serve?

Most people who buy a duplex or triplex plan to turn the property into a revenue stream. If you plan to live in one of the units and rent out the other(s), you'll want to consider just how many tenants you need or would like to have.

If you are buying the property strictly as an investment and don't intend to reside there, you must thoroughly analyze which type brings you the best return. Since every investor is in a different situation, this can often vary.

If you want more space for your family, you must consider how much space is necessary to be comfortable. Those living with parents, for instance, may find that a duplex provides just the right amount of privacy. Those with several young adults living in the home may find a triplex to be more suitable.

How much cash flow do you want?

If you are just looking to break-even or make a little money each month, a duplex should be enough. Consider this: In Montréal subdivisions, duplex homes are priced roughly 50 per cent higher than houses, but owners can typically live "rent-free" just by leasing the second unit.

If you need to earn income from the property each month, a triplex is the better option, regardless of whether or not you live in one of the units. This is especially true in major cities like Vancouver, where real estate prices are high and renters abound.

What's your budget?

It should be noted that triplex homes cost more and will require a larger loan unless you are paying entirely in cash. This could mean a longer period of time before you see actual return on your investment. Hence, first-time home buyers or landlords may find it more feasible financially to start with a duplex, while those who have more cash on hand may opt for a triplex if they are solely purchasing it as an investment.

It's important to account for the upfront payment and then calculate the potential return on investment. It's also vital that you calculate risk and avoid buying a duplex or triplex that's overvalued or destined to decrease in value.

Choosing between a duplex and triplex doesn't have to be an overly complex process, but buyers must get the math right, especially if their financial well-being depends upon the success of the investment. A duplex is certainly the better option for many buyers, but a triplex has greater potential as a long-term investment.

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