What is a Duplex?
A duplex is a residential property containing two separate dwelling units, typically side-by-side or stacked (upper/lower). Each unit has its own entrance, kitchen, bathroom, and living space. Duplexes are the smallest form of multifamily real estate and are one of the most popular entry points for new real estate investors.
The house-hacking strategy is particularly effective with duplexes: buy the duplex as an owner-occupant (qualifying for residential financing with low down payments), live in one unit, and rent the other. The rental income often covers 50-100% of the mortgage, dramatically reducing your housing cost while building equity and investment experience.
Financing a duplex
As an owner-occupant, duplexes qualify for all residential loan types: FHA (3.5% down), VA (0% down), conventional (5-15% down). Lenders can count 75% of the projected rental income from the vacant unit to help you qualify for the loan. As a non-owner investor, expect 15-25% down with conventional financing.
Duplex investment analysis
Evaluate each unit separately: what does each side rent for based on rent comps? Calculate total rental income, subtract expenses (mortgage, taxes, insurance, maintenance, vacancy reserve, management), and determine cash flow. A strong duplex deal in many markets generates $200-$500/month cash flow while the owner occupies one side, and $400-$800+/month when both units are rented.
Duplexes vs. single-family rentals
Duplexes offer higher cash flow per property, lower vacancy risk (losing one tenant is 50% vs. 100% income loss), and house-hacking potential. Single-family homes offer stronger appreciation, broader buyer pool for resale, and easier management. Many investors start with a duplex house-hack, then move out and repeat the strategy, building a portfolio of 2-4 unit properties over time.