What is a Duplex House?

*Updated June 1, 2024

The dream of Texas homeownership often comes with the burden of hefty mortgage payments. But what if you could live in your own home and have someone else help cover the costs? That’s where a duplex for sale, a type of multi-family home, comes into play. These unique residential investment properties offer a compelling blend of homeownership and real estate investment potential, making them an increasingly popular choice with real estate investors in the Dallas Fort Worth housing market.

Duplex Definition: Is a Duplex a Single Family Home?

The duplex definition is a single residential building divided into two separate and defined living units. The duplex meaning is characterized that each side of the duplex house has its own separate entrances, kitchen, bathroom, living space, and possibly outdoor space. These residential homes are two dwelling units occupied that are separate and distinct properties. 

The duplex can be side-by-side like a duet or stacked one on top of the other (“one upper unit, one lower unit”) on two floors. Each residential unit typically mirrors the other in terms of layout and shares a common wall or floors connected. The duplex meaning property usually has a single owner who may reside in unit and rent out the other, or rent out both units.

This flexibility is what makes a duplex house particularly attractive to first-time new real estate investors with an eye towards starting a real estate portfolio. The term “duplex” can also refer to a two-story apartment in certain cities like NYC.

Duplex Apartment Buildings: A Key Difference in Ownership

The primary distinction between a duplex house and an apartment lies in the core home ownership definition. A duplex meaning is privately owned by a single individual who may choose to occupy one unit and rent out the other and have one neighbor. Or simply rent out both units and enjoy the additional cash flow.

An apartment is usually just one unit within a larger building with multiple units, owned by a corporation, group of investors, or a single person. A duplex will only have one neighbor while an apartment building will have many owners and shared walls.

Living in a duplex house offers more privacy and independence than a traditional apartment.  Though it may have fewer amenities than luxury apartment buildings, it has a house like feel with its own entrance. It’s a balance between the community energy of an apartment building complex and the autonomy of a single family house, sometimes referred to as dual occupancy.

Benefits of Owning a Duplex Apartment Building

1. House Hacking: A duplex is especially appealing because of the potential for “duplex house hacking,” a popular real estate investment strategy championed by the online platform BiggerPockets. This strategy involves living in one unit of the duplex while renting out the other. The rental income can significantly offset or even cover your entire mortgage payment, property taxes, and other expenses. This makes homeownership much more affordable and provides a unique opportunity to build equity and passive income simultaneously.
2. Savings and Tax Benefits: In addition to the potential for “duplex houses hacking,” duplex owners can also enjoy various tax deductions on the rental unit, including costs for tenant screening, repairs, marketing, insurance, and maintenance. Depreciation on the property can also lead to significant IRS tax breaks on rental income. As an owner-occupier, you can take advantage of standard homeowner deductions on your personal unit.
3. Building Equity and Wealth: While paying down your mortgage, you are also increasing your equity in the property, which is essentially your ownership stake. Real estate is generally an appreciating asset, meaning its value tends to rise over time. The compounding effect in real estate is a powerful driver of long-term wealth creation. Even more, this home equity and real estate wealth can be used to secure loans for future investments or even to purchase more duplex properties, helping you build a real estate portfolio and create generational wealth.

What Is A Duplex House? Why Buy A Duplex House? Why Sell A Duplex House?

Landlords or investors might sell their duplexes for various reasons, including:

• Bad Tenants: Difficult tenants in a duplex house can be a major headache, leading to financial losses, property damage, and stress.
• Debt: Accumulating debt from mortgage payments, repairs, or other financial obligations can force a sale.
• Repairs: Major repairs, such as foundation issues, electrical problems, or plumbing problems, can become costly and diminish the duplex house property’s profitability.
• Inheritance: An inherited duplex house might not align with the heir’s interests or expertise, leading to a sale.
• Landlord Fatigue: Some landlords might simply want to retire or pursue other interests and get out of the property management business.
• Tax Benefits: Selling a duplex house can offer tax advantages, especially if the owner lived in one of the units, as only half of the sale proceeds might be subject to taxes.

Residential Building: Duplex House vs ADU

Duplexes and Accessory Dwelling Units (ADUs) are two separate units with both types of multi-family housing options, but they have key distinctions. ADUs, also known as granny flats, in-law suites, or garage apartments, are secondary living spaces on a single-family lot. While both duplexes and ADUs have one owner of record, an ADU is considered an extension of the main house, even if it’s a physically separate entrance.

Key differences include:

• Separate Addresses: Duplex apartments have two separate addresses, while ADUs share the same address as the main house.
• Zoning: A duplex house can only be built on lots zoned for multi-family construction, while ADUs can often be built on single-family lots if local regulations permit.
• Ownership: A duplex house is a single property with two distinct living units, while an ADU is considered part of the main residence.

House Hacking A Duplex For Sale

Imagine an investor named Sarah who purchased a duplex for sale for $300,000 with a 20% down payment. Her mortgage payment, including taxes and insurance, is $1,500 per month, assuming a 6.5% interest rate on her loan. She decides to live in one unit and rent out the other for $1,400 per month.

In this scenario, Sarah’s tenant essentially covers almost her entire duplex house cost with the purchase of the duplex for sale. She only needs to pay an additional $100 per month out of pocket for her mortgage. This allows Sarah to live in her own home for a fraction of the cost while building equity and enjoying the tax benefits of being a landlord. This is the power of house hacking, a strategy that has enabled many to achieve financial freedom through real estate investing.

To illustrate the concept of house hacking on a duplex for sale with a real-life example, consider this video by Shelby Grosch, who shares her experience of house hacking a duplex house and how much money she made in one year: Duplex House Hacking.

In the video, Shelby explains that house hacking a duplex for sale allowed her to live almost for free while the other unit and opposite sides are renting out to cover her expenses and generate additional income. While the exact amount of money she made isn’t explicitly stated, the video title suggests that she was able to achieve her financial goals through this duplex house hacking strategy.

This video provides a valuable case study for anyone interested in learning more about house hacking a duplex for sale and its potential financial benefits. By watching the video, you can gain insights into the process of finding a suitable duplex for sale, managing tenants, and ultimately achieving financial freedom through real estate investing.

Duplex For Sale: A Stepping Stone for Real Estate Investors

A duplex for sale are often considered a stepping stone for aspiring real estate investors, particularly those who follow the BiggerPockets philosophy. House hacking a duplex for sale can provide valuable experience in property management and a low-risk way to get started in real estate investing.

By living in one unit and renting out the other side of the duplex house, you can quickly build equity, generate passive income, and learn the ins and outs of the rental market. This strategy using a duplex house can pave the way for future investments in larger multi-family homes, such as triplexes or fourplexes, or other real estate investments.

In our experience in Texas, the house hacking investment strategy with a duplex for sale is effective in big cities from Fort Worth to Plano TX.  Over 2500 real estate transactions in both single family, duplex, triplex, and even some 4 plexes, we have seen this house hacking strategy simply work.  It tends to be more effective in the higher density areas around major cities like Dallas and Garland, but that does not mean it cannot work in the outer cities like Richardson as well. 

Its all about finding the right duplex for sale property at the right entry price.  The key in our opinion is to find a duplex for sale that needs to be renovated and remodeled so you maximize the entry purchase price and allow for new real estate investors to contribute “sweat equity” into the duplex. 

For example, find a duplex for sale that has an old roof that needs replacement, and there is a good chance you can get a discount to market in buying the DFW duplex just like old houses. Even better, duplex investing could be applied to the BRRRR method in Texas and grow exponentially into three and four units and more units!

We have been a part of duplex renovations for customers and its formula for success.  But, a big word of caution. The two major areas to be careful around in our opinion focus on:

• Tenant screening – if you rent out one of more of the duplex units, be sure to carefully screen any potential tenants and get a signed lease agreement so you don’t end up with a squatter rights issue and no monthly rent payments.

• Foundation – we strongly advise to get the foundation checked by a trusted foundation and engineering company.  A bad foundation is fixable but can be costly and blow out any house hacking renovation budget.

In conclusion, a duplex for sale property presents a unique opportunity in Texas to combine the benefits of homeownership with the financial advantages of real estate investing. Whether you’re a first-time buyer in Irving TX looking to reduce your housing costs through house hacking or a seasoned real estate investor in Lewisville seeking to diversify your portfolio, a duplex for sale can be a valuable addition to your real estate holdings.

By understanding the ins and outs of duplex ownership, you can make informed decisions and potentially unlock a path towards financial freedom and long-term wealth creation. If you’re ready to take the next step, don’t hesitate to reach out to our team for personalized guidance (and deals!) on your journey to duplex investing.

Frequently Asked Questions About A Duplex Apartment

What is the difference between a townhome and a duplex?

A duplex house is a single structure divided into two units, while a townhome is one of many units in a row, each with its own owner and share walls of one or more. Townhomes often have homeowners associations (HOAs) that manage common areas and amenities.

What’s the difference between a duplex and a condo?

A duplex is a standalone building with two units, while a condo is a single unit within a larger building or complex. Condo owners own their unit’s interior, but the exterior and common areas are owned and maintained by a homeowners association (HOA), which charges monthly fees.

What is the difference between a townhouse and a condo?

The main difference is ownership structure. Townhouse owners typically own the land their unit sits on, along with the exterior of their unit and a small yard. Condo owners only own the interior of their unit, with the land, exterior, and common areas owned by the condominium association. This means condo owners pay HOA fees for maintenance and upkeep, while townhouse owners are responsible for their own exterior maintenance.

Is a duplex a single-family home?

No, a duplex is not considered a single-family home. It falls under the category of multi-family housing because it accommodates two separate families in distinct units. Although facing opposite directions, you will have a family occupying shared square footage with a shared wall or floor.

What is a twin home?

A duplex house is one building with two units sharing a common wall, whereas twin homes consists of two separate buildings on separate lots. Each twin home usually has a different owner.

What is the best way to find a duplex for sale?

You can find duplexes for sale through real estate agents, online listings (like Zillow or Redfin), or by driving for dollars around DFW neighborhoods and looking for “For Sale” signs for duplex buildings.

How much does a duplex cost?

The cost of a duplex house varies widely depending on location, size, condition, and current housing market trends. In the Dallas Fort Worth area, prices can range from $200,000 for fixer-uppers to well over $500,000 for updated properties in desirable neighborhoods like Frisco or Rockwall TX. It’s crucial to research the housing market and work with a qualified Realtor and contractor to determine a realistic budget.

What are the financing options for buying a duplex?

There are several financing options for duplexes, including conventional mortgages, FHA loans, and VA loans (for eligible veterans). It’s important to shop around and compare interest rates, terms, and down payment requirements to find the best loan for your situation. Some lenders specialize in investment property loans, and some might only work with single family homes as compared to duplex homes so consider working with a mortgage broker who can help you explore your options specific to mortgage with duplex features on the loan.

What are the legal considerations of owning a duplex?

As a duplex owner, you’ll be subject to landlord-tenant laws, which vary by state and municipality. These laws cover topics like lease agreements, security deposits, eviction procedures, and fair housing practices. It’s crucial to familiarize yourself with these regulations to protect both yourself and your tenants. You may also need to obtain specific permits or licenses to operate a rental property in your area.

What are the ongoing maintenance and management responsibilities of owning a duplex?

 As a duplex owner, you’ll be responsible for maintaining both units of the property, including repairs, landscaping, yard work, and a telecommunications system like internet access. You’ll also need to manage tenant issues, collect rent, and handle any legal or financial matters related to the property. Since a duplex building is typically owned by owner-occupant (i.e. Bigger Pockets style househacking), which leaves one apartment style unit in close proximity, the owner might choose to self manage. However, as growth of a duplex building portfolio to many duplexes, owners might choose to hire a property manager and company to handle these tasks for a fee.

*** Written by Patrick and Hilary Schultz who have a combined 40 years of investment and real estate experience in Texas, Florida, and New York.  Reach out to our team to learn more about how we can help you create wealth in real estate investing.