Questions to Ask When Buying a Duplex
For buyers looking at a two-unit property, whether to rent both sides or live in one. These 20 questions cover rents and leases, metering, real operating costs, permits and zoning, the condition of two sets of systems, and the tenants you would inherit.
The questions
Open any question for the note
What is each unit renting for right now, and when was each rent last raised?
Why ask it
A rent that has not moved in four years usually means a tenant the owner did not want to lose, and raising it to market may cost you that tenant plus a turnover. Price the building on today's rents, then treat any increase as upside you have to earn.
May I see the actual leases and a rent roll, including the security deposits held?
Why ask it
Leases contain the terms you inherit, not the ones the seller describes: month to month versus fixed, who pays which utility, whether pets or parking were granted verbally. Deposits transfer with the property in most states, so confirm the amount exists in an account rather than in the seller's pocket.
What is each tenant's payment history over the past year, and have any notices or evictions been filed?
Why ask it
Ask for the ledger, not an adjective. A tenant who pays on the eleventh every month is a different proposition than one who pays on the first, and an eviction that was started and then dropped tells you the owner did not want the vacancy.
Are the units separately metered for gas, electric and water, and who pays what today?
Why ask it
One shared meter means every utility increase lands on you and you cannot bill it back, and retrofitting separate service is a permitted job that often runs into five figures. Check the meter bank yourself and count the meters against the number of units.
What did it actually cost to operate this building in each of the last two years?
Why ask it
You want the bills: taxes, insurance, water and sewer, any landlord-paid utility, trash, lawn and snow, repairs, and turnover costs. Sellers routinely quote a number that leaves out repairs and their own labor, and those two lines are usually what separates a positive month from a negative one.
What is the current property tax bill, and how will it be reassessed after the sale?
Why ask it
In many jurisdictions a sale triggers reassessment at your purchase price, and an owner who has held the building for twenty years may be paying on a value far below what you are about to pay. Call the assessor and ask how the transfer will be treated before you underwrite the deal.
What does the current insurance cost, and what has your claims history been?
Why ask it
A landlord policy on a two-unit costs more than a homeowner policy, and prior water or liability claims can follow the address into your quotes. Get your own quote during your inspection period rather than assuming the seller's premium carries over.
When were the roof, heating systems, water heaters, electrical panel and plumbing last replaced?
Why ask it
A duplex has two of most things, so a building with two twenty year old furnaces has two replacements queued rather than one. Ask for invoices, then match the install dates on the equipment labels against what you were told.
What repairs have you been putting off?
Why ask it
Asked plainly and open ended, this often gets an honest answer that no inspection report would surface: the back stair that flexes, the basement that takes water in spring, the tenant who has been complaining about heat. Silence in response is itself informative.
Is the property legally a two-unit under current zoning, or a legal nonconforming use?
Why ask it
A nonconforming duplex can usually keep operating, but many ordinances forbid rebuilding it as two units after a substantial fire or loss, which changes both your insurance needs and your exit. Get the answer from the zoning office rather than the listing agent.
Is the second unit fully permitted, and does it appear on the certificate of occupancy or property card?
Why ask it
Converted basements and attics are the most common unpermitted units, and an insurer that learns it is covering an illegal unit can deny a claim while the municipality can order it closed. Compare the town's record of the building to what you walked through.
Are there any open code violations, permits left open, or liens against the property?
Why ask it
An open permit from work finished years ago has to be closed before you can pull your own, and that sometimes means opening a wall to show an inspector what is behind it. Pull the address history at the building department yourself.
What does the fire separation between the units and the basement look like?
Why ask it
Two-unit buildings usually require rated separation between units and around the shared mechanical space, and older duplexes commonly fail this after decades of renovations. Your inspector should look specifically at the ceiling below the upper unit and the door at the top of the basement stairs.
How long has each unit sat empty between tenants, and how do you usually fill a vacancy?
Why ask it
Time to lease is the number that decides whether your vacancy allowance should be one month a year or three. A seller who has always rented to friends of current tenants has never really tested the market, so verify demand against current listings for comparable units.
Which appliances, window units, laundry machines and fixtures stay with the sale, and who owns them?
Why ask it
Tenant-owned refrigerators and rented water heaters both leave gaps you have to fill at closing. Coin laundry in the basement may also be on a lease with a route operator, which is a contract you would inherit.
What is shared between the units: laundry, storage, yard, driveway, attic access?
Why ask it
Every shared space is a future dispute, and how the current owner has handled it sets expectations you will have to reset or live with. Ask specifically who parks where and whether that arrangement is in either lease.
Who has been managing the building, and what would professional management cost here?
Why ask it
An owner living on site absorbs labor that will not be on any expense statement, and a management fee on two units is usually a higher percentage than on a larger building. Get a quote from a local manager so your numbers survive the day you stop wanting to take the calls.
If I plan to occupy one side, which unit would be delivered vacant, and how?
Why ask it
Owner occupancy usually opens better financing on a two-unit, but only if a unit is actually available to you at closing. A tenant with a fixed lease cannot simply be removed, so the vacancy has to be arranged before closing and written into the contract.
Why are you selling, and how long has the property been on the market?
Why ask it
A seller who is tired of tenant calls will negotiate on price, and a seller responding to a tax reassessment or a coming repair may be handing you the same problem. Long time on market in a tight rental area usually signals something about the building rather than the price.
May I walk inside both units and speak with the tenants before closing?
Why ask it
A seller who will only show one unit is hiding the other one's condition, and tenants will tell you about the heat, the water pressure and the landlord's response times without any incentive to soften it. Schedule the walkthrough for a weekday evening when people are home.
Underwriting a Duplex
Practical guidance for the conversation itself
How to Verify What You Are Told
Match the rent roll to the bank statements
Ask for twelve months of deposits on the account that receives rent, and reconcile them against the rent roll. Stated rents are often the rents the owner wishes they were collecting, or they include a family member paying nothing. Deposits that consistently fall short of the rent roll mean either concessions, late payments, or a unit that is empty more than you were told.
Underwrite with two of everything
Two furnaces, two water heaters, two kitchens, two sets of appliances, twice the turnover painting. Build a capital reserve line based on the actual age of each system rather than a flat percentage, because a duplex where both furnaces were installed the same year in 2004 has a single very expensive year ahead of it.
Get your own insurance quote during the inspection period
Premiums on small rental properties have moved sharply in many markets, and the seller's renewal rate does not transfer to you. Give a broker the address, the roof age, the wiring type and the claims history, and put the real number in your model before your contingency expires.
Check the town's record of the building against the building itself
Pull the property card, the certificate of occupancy and the permit history at the municipal office. You are looking for a unit count that matches what you toured, permits that were closed out, and no open violations. Unpermitted second units are the single most expensive surprise in small multifamily, because they can affect financing, insurance and legal occupancy all at once.
Numbers to Run Before You Offer
- 1Gross scheduled rent at today's actual rents, not at what the seller thinks the units could get.
- 2Vacancy allowance based on the building's real time to lease, plus turnover cost per move-out.
- 3Operating expenses rebuilt from the actual bills, with taxes reassessed at your purchase price.
- 4A capital reserve set from the age of the roof, both heating systems and both water heaters.
- 5Net operating income, then debt service at the rate you are actually quoted rather than the one you hope for.
- 6The same model run again with one unit vacant for three months, to see whether the deal survives a bad quarter.
Red Flags on a Duplex
- One water or gas meter for two units, with the owner absorbing the bill.
- A second unit that does not appear on the certificate of occupancy or the assessor's property card.
- A seller who will not let you inside both units or will not let you speak to tenants.
- Rents well below market with long tenancies, which means your projected income depends on displacing people.
- No documentation for security deposits that the leases say are being held.
- Open permits or violations at the building department, especially electrical or egress.
- Both furnaces, both water heaters, or the roof and the roof drainage all at the end of their service life at once.
- An expense statement with no line for repairs, which is a statement written to sell rather than to inform.