301 LORNE Avenue, Kitchener, N2M3Y9
301 LORNE Avenue, Kitchener, Ontario N2M3Y9
318 FOUNTAIN Street S, Cambridge, N3H1H8
318 FOUNTAIN Street, Cambridge, Ontario N3H1H8
197 PALMER Avenue, Kitchener, N2G3P7
197 PALMER Avenue, Kitchener, Ontario N2G3P7
97 ST GEORGE Street, Kitchener, N2G2T2
97 ST GEORGE Street, Kitchener, Ontario N2G2T2
10 PINECREST Drive, Kitchener, N2A2G6
10 PINECREST Drive, Kitchener, Ontario N2A2G6
318 ERB Street W, Waterloo, N2L1W3
318 ERB Street, Waterloo, Ontario N2L1W3
What is a Triplex?
A triplex is basically three homes in one building. There is one property on a single lot with one owner that contains three unique residences, three separate entrances, and three individual unit numbers.
Tenants usually share one or two common walls in triplexes, but each unit has its own kitchen, bathroom(s), and living room. The owner of the triplex is responsible for the upkeep and insurance of the property. Triplexes are often not permitted in residential zones.
Styles and Formats for Triplexes
Triplexes can be built with intentional planning as a three-unit dwelling, or can be the result of the conversion of a dwelling which was originally built as a single family home. Side by side units or stacked units are most common for triplex layouts.
Side by side triplexes are similar to townhouses or row houses and consist of three units which are attached by one or two shared walls. The stairs for each unit are usually located along a shared wall. These residences usually have more than one level.
Stacked triplexes are similar to apartments and consist of three units located above or below one another. These residences often consist of one level with no interior stairs.
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Where Can Triplexes Be Found in Kitchener-Waterloo?
The highest concentration of triplexes is evenly distributed across multiple areas in the Central Kitchener area – Downtown Kitchener, King Street East, Mill-Courtland, and Cherry Hill.
In Kitchener you can also find triplexes in the areas of Heritage, Midtown, and Rosemount with some overlap into Waterloo with Midtown. And in Waterloo you can find triplexes in the University area.
Advantages of Triplexes
Financial – Owning a property with three units means more potential rental income. This income can be used toward obtaining a mortgage for the triplex itself or another property investment. When the market for the area is expensive, rental income can be particularly helpful in securing financing that might usually be unattainable.
Taxes – When it comes time to complete tax returns, owners of triplexes can claim things like interest paid on the mortgage, cost of utilities throughout the year, any repairs or maintenance conducted on the property, and cost of insurance on the triplex.
Greater Revenue – An option for the owner is to live in one of the units of the triplex, at least for a year, to save on the down payment needed to purchase the property. Add this to the fact that sharing a property with others who are paying rent also increases the owner’s revenue stream.
Living Close to Family / Friends – This is especially advantageous for families who need intergenerational living due to caring for elderly or ill family members. If the owner has a desire to help out family / friends who are just entering family life or starting a new career, then a triplex situation could be beneficial for all parties involved.
Disadvantages of Triplexes
Landlord Issues – Have you considered what life as a landlord might be like? Interacting with tenants can be time-consuming and frustrating.
It is of the utmost importance for landlords to screen tenants beforehand and get an idea of whether or not tenants will be reliable in paying rent, and how they have handled a rental situation in the past.
Gathering information from credit checks and references is extremely helpful. Be aware that some tenants will require more time and care than others, and this can be aggravated if you live at the same property.
Increased Costs – With a larger property comes larger bills. Utility costs will be higher, and repairs and maintenance will cost more with a triplex. Three individual sets of kitchens, bathrooms, bedrooms, and living / dining rooms will mean more upkeep than a property with just one set of living spaces.
Limited Buying Options – There may be limited options for buying a triplex in a specific area, and you may have to expand your search to find what you are looking for.
Considerations When Buying a Triplex
Owners need to determine if they can manage three different units and three unique sets of tenants (possibly including their own living space and family members) – all co-existing in close proximity to one another.
Will the mortgage and housing costs be manageable with the rent that can be expected from the property? How old is the property and what sort of repairs are on the horizon?
Can the repairs be completed with tenants living on-site or will there be a gap in rental income for a time? There is much planning that goes into owning a triplex.
Obtaining a Mortgage for a Triplex
There is a range of required down payment amounts for triplexes. If a property owner chooses to live in one of the units, at least for a year, the down payment can be as little as 10%.
Living off-site and treating the property simply as an investment means owners will need a larger down payment – more like at least 20%. The good news is that qualifying for a mortgage can be easier if owners can use a large portion of potential rental income in the calculations.
Financial and Cashflow Considerations for a Triplex
If the property is in good condition, in a good neighbourhood, with access to many of the area’s amenities, this will make it easier to rent out the triplex units and see a positive cashflow.
When tenants are looking through potential living spaces, they are quick to notice any disrepair or potential danger zones in rental situations. Making it easy for tenants (possibly including yourself) to live in a property increases your chances of a successful investment situation.
Can you afford any repairs needed – whether or not you can do the repairs yourself or need to hire someone else? Can you see tenants being happy in the area and wanting to stay long-term?
These are good questions to consider when buying a triplex and hoping to experience a positive cashflow from your investment.
Conclusion
Triplexes can be easier to manage than a fourplex and bring in more income than a duplex – they can be a happy medium between the two if managed well and tenants are happy.