A triplex investment can be a great resource for investors and renters. A triplex is a type of multi family property consisting of three individual dwelling units combined into a single building. Each dwelling unit is self-sufficient, meaning each one has its own living room, kitchen, bathrooms, a separate entrance door, and its own address. Sometimes the main address will be the same, with A, B, and C units for rental.
The Benefits of Investing in a Triplex
- Income: You can choose to rent out all three units, or you may choose to live in one of the units of the triplex and rent out the other two. In both cases, you can benefit from multiple streams of rental income.
- Affordability: A triplex is usually more expensive than a single family home at first. However, you are getting three units in one transaction, which makes them very affordable in the long run.
- Easy mortgage payments: Investing in a triplex gives you the ability to live for free or cheap. Living in one part of the triplex and collecting rent from the other parts can potentially cover or lower your monthly mortgage payments.
- Easy financing: It’s relatively easy to get financing to purchase a triplex. That’s because lenders view this type of investment property as less risky compared to properties that rely on a single tenant. If you live in one unit, you can qualify for an FHA loan, which comes with a low down payment of 3.5%.
Now let’s take a look at the downsides…
The Drawbacks of Buying a Triplex
- Limited options: Triplexes may be hard to find in city centers. You typically need to move away from the central zone and into the suburban areas to find a triplex for sale. As a result, you may have very few options to choose from if you want a triplex in the center of the city.
- Maintenance responsibility: When it comes to buying a triplex, the responsibility for the maintenance and repair of the building falls to the owner. This means that if damage occurs in any of the units, you will have to spend money and time to get it fixed.
- Tenant disagreements: Because tenants will be living close to each other, the likelihood of disagreements between them rises significantly. This can come in any number of forms, from noise to smells to parking complaints. This can ultimately lead to turnover.
- Living with tenants: If you decide to live in the triplex, you will be living right next door to your tenants. This can cause a lot of headaches for you as a landlord, especially if you have a tenant who always comes to you every time they need help with something.
There’s a lot to consider when it comes to investing in a triplex property. By weighing your costs and benefits, you can make sure to sustain a profitable and enjoyable property.