What Is a Multi-Family Home?

A duplex is a single house that has been split into two units. Each unit will have a separate entrance and living area, with no shared bathrooms, kitchen, or living space. 

How much should property managers charge for rent? When renting a home, most follow the 1% rule, meaning the monthly rent should be 1% of the home’s total value. So if the total value of the property is $300,000, the total rent should be $3,000. So each duplex would be $1,500 per month. 

A triplex is a house that has been split into three units. Like duplexes, each unit in a triplex usually has its own entrance, kitchen, bathroom, and living space. Triplexes can have various layouts, such as side-by-side units or one unit on top with two below. 

The greatest advantage of owning a rental property is you’ll have a steady stream of passive income from your tenants. In fact, the more units you’re able to rent, the more income you’ll generate from your rental business. While you’ll still be responsible for upkeep, you can generally write off business expenses from your annual income taxes. 

While property owners receive income in the form of rent payments, the multi-family home is itself a tangible asset, one that typically appreciates in value. 

Investors commonly speak of real estate as a “buy and hold” investment. This means that you’ll purchase a real estate property today and then sell it for a substantial profit several years down the line. If you time the market strategically, you stand to reap major rewards from your real estate property. 

Investors also speak of “diversification,” which means that they distribute their investments across multiple asset classes. 

For instance, you might invest in the stock market, but that places your money at risk if your chosen company underperforms. Investing in tangible assets such as real estate ensures that your investments are diversified across multiple types of assets, which can help you in a struggling economy. 

Single-family homes offer several advantages, including: 

• Lower vacancy rates 
• Higher demand for renters vs. multi-unit properties 
• Higher rent payments 

Additionally, when you’re ready to sell the property, you’ll likely find a larger pool of potential buyers for a single-family home vs. a multi-unit investment property. 

On the other hand, a multi-family property offers greater economic potential than a single-family unit for the following reasons: 

• More units will provide more opportunities for income 
• More units will make it easier to scale your rental business 
• More units will lower the impact of vacancies in one or two units 

While multi-family units require a larger initial investment, the income from multiple units will provide a greater source of monthly income than solely owning a single-family home.