Duplexes and townhomes share one key characteristic, a wall with an adjourning unit. Even though they both share walls, duplex and townhouses are very different types of properties. When deciding which type of property to buy it is up to you to decide what makes the most sense for your lifestyle, budget, and goals.
Per Realtor.com townhouses are defined as a “single-family dwellings that share a wall with another house”. Unlike a duplex or fourplex, each townhouse is individually owned. Townhouses are popular with first-time homebuyers due to the lower price point and proximity to metro areas. Like a condo, much of the exterior maintenance is handled by the association and paid for out of HOA dues or assessments.
Two homes within the same building owned by one individual. The units may be up on different levels (up/down) or side by side with a shared wall. A duplex is commonly called a multi-family property because more than one family could live in them. The price point for duplexes is higher as the purchase is for more than one unit. In 2018 the average sales price for a duplex in the Minneapolis-Saint Paul market was $305,000 and 74% of all Minnesota multi-family properties were sold in Minneapolis and Saint Paul.
Beyond the benefits of no HOA fees and being able to collect rental income from the other unit, when you purchase a duplex, you’ll be able to use the projected rental income it is expected to generate when it comes to borrowing.
This means that you would likely be approved for a higher loan amount if you’re purchasing a duplex, triplex, or fourplex when compared to a townhouse. The common equation looks like this:
Income + Credit Score + Projected Rental Income = Mortgage Approval Amount
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