In this article, I will share what is a Triplex House. What are the main differences between Duplex, Triplex, and Fourplex homes? Plus, the advantages and disadvantages of owning a Triplex House. I will share everything that you must know before you buy one.
But let me tell you, they don’t build triples homes on the first attempt. It is created by modifying the apartment and constructing stairs to connect the three units. People do it when they need it. That is why you don’t see many triplex homes in a building.
What Is A Triplex House Exactly
A triplex house, or three-decker or triple-decker, is a building that contains three separate units combined into one structure with one or two common walls. Every unit in a triplex has its own bathroom, kitchen, living room, exterior doors, and unique address.
Although, some units are built specifically as triplex. But most of the time, they convert a big single-family apartment into a triplex apartment if they need it later on.
A triplex is sold as a single house, not as a single unit. The owner either rents out all three triplex or lives in one and rents the others, like House Hacking. Most investors buy these properties for investment to generate cash flow from it.
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The Difference Between a Duplex, Triplex, and Fourplex Homes
These Duplex, triplex, and Fourplex homes are not the same. They have many differences that you should know, and those are as follows.
- Duplex Homes: A building with two separate living units. Either side-by-side or one on top of the other. Each duplex must have a separate entrance, kitchen, bathroom, and other utility services.
- Triplex Homes: A building with three separate living units and all other homes amenities must be there.
- Fourplex: A building with four separate living units, and a combination of those above, you can say.
Duplex homes are less expensive than Triplex and Fourplex, and you know that. Most homebuyers prefer Duplex homes, but if your family is big, you can choose the Triplex home option. It’s more comfortable.
Okay now you know what is a triplex house. It is time you know about the pros and cons of the triplex.
Advantages of Owning a Triplex Home
There are some huge advantages of investing, owning, or living in a Triplex House on rent, and those are as follows.
- Here, all three units share the same yard, roof, and other shared features. Repairing a broken item and maintaining it can be more efficient.
- You, as a landlord, can deduct some maintenance fees, depreciation costs (if you use it), and repair costs for the rental units, which can save you some money on taxes.
- All the utility expenses, in the building, can be written off if the owner pays for the utilities (applicable for tenants).
- When repairs are needed, the landlord is closed (only for tenants).
As you can see, in terms of investing and taking it as a tenant, both can be amazing due to the advantages of these Triplex Houses.
Disadvantages of Owning a Triplex Apartment
Although there are some disadvantages of Triplex Apartments that you should know before investing and those are as follows.
- Triplex apartments can be more challenging to sell. There are multiple tenants with lease expiration dates coming up. Handling those can be tricky.
- Living so close to tenants is stressful as a landlord. You might lose your value in their eyes. That can affect the rental income. I mean they will delay paying the rent. In the rental business, you should always show that you are a tough guy. Otherwise, you will suffer.
- And lastly, triplex homes are more costly than duplex or single-family houses as they take more money to build.
Keeping all these disadvantages in mind, do you think these Triplex homes are good? I would say yes. Because of the many advantages, it offers.
How to Finance A Triplex House
Now let’s talk about financing and how to finance your purchase in the simplest way possible.
A triplex, like a duplex or a fourplex, is eligible for a mortgage loan because it contains less than five units that qualify for a residential loan. If it exceeds more than five units, then commercial loans are used to finance the building.
So you can take a loan from the bank like a normal loan and finance your investment. But for big buildings, it might take some more effort.
How to Analyze A Triplex Home
Just understanding what is a Triplex House will not get you the best deal. You also need to know how to analyze them.
No matter what you have intended to do with the triplex unit, live there, or rent them out totally, you must check these factors before purchasing any if you don’t want to lose any money here.
- Analyze all the data the property has. Such as maintenance costs, vacancy rates, gross operating income, and anything that impacts the houses.
- What about the location? Is the property located in an attractive neighborhood where people want to live?
- What are the rents for other duplexes, triplexes, or fourplexes in the neighborhood? Know it to have an idea of how much you can get every month from those homes.
- Is the job market stable there? What is the unemployment rate?
- What is the percentage of new startups happening in the city?
- What about the crime rates in the area?
- Are transport facilities good there?
Analyze all the things like you are buying a big rental property. Use all the due diligence methods here, as you do in your other real estate investing. Do it so you can make a profit.
Taxes on Triplex Homes
As you know, properties occupied by the owner, such as single-family homes benefit from homeowner tax discounts. If you rent out the extra units within the same house you may be eligible for further deductions.
But consult a tax professional before making any guesses. I am not an expert. Property taxes is a legal thing. You should not take them lightly.
So now you tell me what is a Triplex House and what is the difference between Duplex, Triplex, and Fourplex Homes. You know the advantages and disadvantages of how to do due diligence. I wish you the best of luck. Thanks for reading. See you soon.