A triplex is a residential building divided into three separate homes. Each unit has its own entrance, kitchen and bathroom, and the building usually sits on one lot under one owner. Triplexes are part of what is often called small multifamily housing, alongside duplexes and fourplexes.
Common layouts
- Stacked: one unit per floor in a three story building, common in older cities.
- Side by side: three units next to each other, like a short row of townhouses.
- Mixed: a larger owner’s unit plus two smaller apartments, or units added to a converted house.
Financing a triplex
Because lenders generally treat buildings with up to four units as residential, a triplex can usually be bought with a residential mortgage rather than a commercial loan. Owner occupied loans, where the buyer lives in one unit, can allow smaller down payments than investment loans, subject to each program’s rules. Some government backed programs add a test for three and four unit buildings that checks whether the expected rent can cover most of the mortgage payment, so it is worth asking a lender early.
Running the numbers
Take a hypothetical triplex bought for $480,000 with units renting for $1,500, $1,500 and $1,700.
| Line item | Annual amount |
|---|---|
| Gross potential rent ($4,700 x 12) | $56,400 |
| Vacancy and credit loss (5%) | minus $2,820 |
| Operating expenses (taxes, insurance, repairs, utilities the owner pays) | minus $17,500 |
| Net operating income | $36,080 |
The cap rate is $36,080 divided by $480,000, about 7.5%. If the owner lives in the $1,700 unit, the two rented units bring in $36,000 a year in rent, which can cover a large share of the mortgage, depending on the loan.
Pros and cons for landlords
Pros
- Three rents from one roof, one lot and one closing
- A vacancy cuts income by about a third, not all of it
- Residential financing and a wide pool of buyers when you sell
Cons
- Shared walls and shared systems mean more tenant interaction and noise questions
- Some costs, such as a roof or boiler, hit all three units at once
- Local zoning and the certificate of occupancy must allow three units
Why it matters for landlords
A triplex is a step up from a single rental without the full complexity of an apartment building. Keep units on separate leases and ledgers, decide how shared utilities are handled and plan for building wide repairs. TenantLoop treats each unit as its own rentable space with its own lease and rent, and rolls the three up into one property profit and loss.
Related terms
Where it gets confusing.
Is a triplex residential or commercial property?
For lending, buildings with one to four units are generally treated as residential, so a triplex can usually be financed with a residential mortgage. Buildings with five or more units typically need a commercial loan.
Can I live in one unit and rent the other two?
Yes, and many first time investors do. Living in one unit can make you eligible for owner occupied loan programs, which often allow lower down payments, as long as you meet each program's rules.
Do the units in a triplex need separate utility meters?
Not always, but separate meters make billing simpler. When units share a meter, the lease must say how the cost is split or whether it is included in rent, following local rules.