Shared wall or shared kitchen for a first house hack

Question

I've been reading listings in two directions for about a month and they lead to completely different lives.

Direction one is a small multifamily, duplex or triplex, where I take a unit and the tenants have their own doors, their own kitchens, their own utilities if the building is metered that way. Direction two is a single family house in a decent school pocket where I take the primary bedroom and rent two or three of the others out, or add a basement unit later.

What pushes me toward the multifamily is that I never share a kitchen with a stranger and the units are legally separate, so if I move out later the whole thing converts to a rental without changing anything. What pushes me toward the single family is price. The duplexes I can find near me start about $120k above the houses, and per-room rents in my market are surprisingly strong compared to per-unit rents, because the tenant pool is young and shares by default.

The part I haven't resolved is the wear. Three unrelated people sharing one kitchen and one washer is a different maintenance picture than three households each with their own. And I'd be living inside it either way, so my tolerance is part of the underwriting whether I like it or not.

For a first purchase, which of these actually holds up better? I'm interested in the version that survives year three, not the one that looks best on a spreadsheet in month one.

Rena Guide · Accepted Answer

@rigging both can become rentals, and the difference is practical.

A duplex has two separate dwelling units, each with its own kitchen, bathroom and entrance. When you move out, you sign a lease on the unit you were living in and the building operates as a two unit rental. Nothing about the property changes.

Renting rooms in a single family house means you have one dwelling unit with several tenants inside it. That works well when an owner lives there and handles the shared spaces. With no owner on site, someone has to manage the kitchen disputes, the cleaning, and the fact that each tenant's behavior directly affects the others. Some owners run that as a business. Many find it heavier than a normal lease. Local rules also matter here, because some cities cap the number of unrelated adults in one dwelling or require a rental license for room rentals, and those rules vary by city and state. Check your own zoning code and rental ordinance before you count on the income.

One financing point for @canton: owner-occupant loan programs are what make either version work, and a two-to-four unit purchase with an FHA loan can be done at a low down payment while a pure investor cannot get those terms. There is also a Fannie Mae policy allowing projected accessory dwelling unit rent to count toward qualifying income on a one-unit owner-occupied purchase, capped at a share of total income. Ask a lender to confirm current terms and caps in writing, since program rules change.

megan_doyle15 · Answer

Total beginner question, sorry. When you say the duplex "converts to a rental without changing anything," is there a rule that stops you from doing that with the bedroom version? Or is it just that renting rooms in a house you don't live in is a mess?

bmoreno23 · Answer

I came at this from zero last year and the thing that decided it for me was a boring one. I asked myself whether I'd still want a roommate in month 30, when the novelty is gone and someone's dishes are in the sink.

Answer was no. So the bedroom version was off the table for me regardless of what it paid. @canton if you can honestly say yes to that question you have more options and cheaper entry points than I did, which is a real advantage.

stephen_ok9 · Answer

@canton the $120k price gap is the whole question and I'd size it before choosing.

Run both as monthly numbers. Take the duplex, put your best rent estimate on the other unit, and see what you're left paying. Then take the house, put per-room rents on two rooms, and do the same. In most markets I've looked at, the house with two rooms rented lands you a lower net payment than the duplex, because you bought $120k less debt. The duplex usually wins on everything except that.

So the way I'd decide is: if the monthly gap between them is small, buy the separate units, because separate units survive your own change of heart. You can move out, lease your side, and stop thinking about it. If the monthly gap is large, the house is buying you real money and you have to decide whether you'll actually live that way, which is @ember's question and only you can answer it.

The third option matters too. A single family with a basement that could legally become a separate unit gives you the cheap entry now and separate units later, if the ceiling height, egress and permitting work in your jurisdiction. Those requirements differ by city and state, so get a straight answer from your building department before you pay for a house on the strength of a basement.

And don't underwrite either one at full rent coverage. Covering part of the payment is what most of these do at current prices.

Shared wall or shared kitchen for a first house hack

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