Duplex, triplex or quadruplex: which multiplex should you invest in?
Frédéric Vinet, real estate broker
Choosing between a duplex, a triplex and a quadruplex depends on your budget, your goals and how much time you want to put into management. A duplex is often a way in, and simpler to manage. A triplex strikes a balance between income and management. A quadruplex spreads the income across four units, but calls for a deeper analysis. The neighbourhood matters as much as the number of units.
Investing in an income property in Montréal can take many forms. Among the options investors look for most, the duplex, the triplex and the quadruplex hold a big place in the market.
But which one should you choose?
There's no single answer. The right building depends on your budget, how much you can invest, your long-term goals and how involved you want to be in managing your property.
Here are the main differences to know before you choose.
The duplex: a way into real estate investing
A duplex has two units. It can be a good option for a first real estate investment, especially for someone who may want to live in one unit while the other brings in income.
This strategy lets you combine a home and a real estate investment in the same property.
For an investor, a duplex can also be appealing because it's generally simpler to manage than a building with several units. Fewer tenants can make the property easier to keep track of.
In Montréal, you'll find plenty of duplexes in established neighbourhoods like Rosemont–La Petite-Patrie, Villeray, the Plateau-Mont-Royal and parts of Outremont.
The triplex: more income and more potential
With three units, a triplex offers one more source of rental income.
For an investor who wants to start building a real estate portfolio, a triplex can be a good compromise between the number of units, the potential income and managing the building.
A triplex can also be especially interesting when the owner lives in one of the units. The other two can then contribute to the property's income.
In sought-after areas like the Plateau-Mont-Royal, Rosemont, Villeray or Outremont, though, rental demand and the neighbourhood's characteristics need careful analysis. The purchase price can vary a lot from one area to the next, and so can rental income and the building's potential.
The quadruplex: stepping up to a bigger investment
A quadruplex has four units, so it brings in rental income from several units.
For an investor, that spread of income can be attractive. If one unit sits empty for a while, the others keep bringing in income.
On the other hand, a four-unit building generally calls for a deeper analysis of its income, operating expenses, maintenance and management.
A quadruplex can be especially interesting for an investor who wants a building with more income potential while staying in a category that's relatively accessible compared with some larger multi-unit buildings.
Which multiplex fits your goal?
Choosing between a duplex, a triplex and a quadruplex should come down, first and foremost, to your investment strategy.
If you're taking your first steps into rental property, a duplex can be a simpler way to get familiar with managing an income property.
If you're looking for a balance between management and potential income, a triplex can be a good option.
If your goal is to maximize the number of units and the income from a single property, a quadruplex is worth considering.
Either way, the number of units isn't the only thing to look at. Two triplexes in different neighbourhoods can have completely different investment profiles.
The neighbourhood matters as much as the number of units
In Montréal, location plays a major role in an income property's value and potential.
A duplex on the Plateau-Mont-Royal won't necessarily have the same characteristics as a duplex in Rosemont–La Petite-Patrie. The same goes for a triplex in Outremont, a quadruplex in Villeray or a building in the Sud-Ouest.
To analyze a property, consider:
- rental demand in the area
- current rental income
- the potential to increase income
- the price of comparable properties
- the general condition of the building
- upcoming work
- municipal and school taxes
- operating expenses
- the location and access to services and transit
A sought-after neighbourhood can support rental demand, but a higher purchase price can also have a big impact on the return on your investment.
Montréal: think beyond the purchase price
When you're looking for a multiplex in Montréal, it can be tempting to compare properties on price alone.
But the purchase price only tells part of the story.
A more expensive building can sometimes offer better income, good growth potential or lower expenses. On the flip side, a property listed at a lower price may need major work or bring in less attractive rental income.
That's why a full analysis of the building and its potential is essential before you make an investment decision.
Which type of multiplex is the best investment?
There's no "best" multiplex for every investor.
The best choice depends on your financial situation, your experience, your goals and the market you want to invest in.
A duplex can be a perfect fit for a first-time buyer-investor. A triplex can suit a strategy of gradually increasing rental income. A quadruplex, for its part, can appeal to an investor who wants more units in a single property.
What matters is looking at the whole picture: the property, the income, the expenses, the financing, the neighbourhood and the long-term potential.
