How to Analyze a Duplex

Confirm the second unit is legal

Legal status affects financing, insurance, rent and resale. Verify zoning permissions, any required permits and fire separation requirements with the municipality rather than relying on the listing description.

An unregistered unit is not automatically a dead deal, but it is a different deal, and it should be priced as one.

Underwrite the shared systems

Roof, foundation, electrical service, heating and plumbing are usually shared. One failure hits both units and both income streams at once.

Check whether utilities are separately metered. Owner-paid heat and hydro on an older building can consume a large share of NOI and are hard to reduce quickly.

Model both occupancy scenarios

Run the numbers as a pure rental, with both units at market rent and full expenses including management.

Then run the owner-occupied case, where one unit's rent is replaced by your own housing cost saving. These are different investments with different financing and different risk.

Duplex-specific risks

Tenant proximity matters more than in a larger building: noise, parking and shared laundry drive turnover. Turnover is one of the most expensive line items in small residential.

With only two units, a single vacancy removes half your income. Your vacancy allowance and cash reserve should reflect that concentration.

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