Buying a Duplex or Multi-Family Property in Fort Worth
The short answer: a duplex or small multi-family property can make sense if you want more than one unit of rent from a single purchase. The details that decide whether it works are zoning, city registration rules, financing and how the numbers hold up with real taxes, repairs and vacancy. This page covers what to check first.
This is general information, not investment, tax or legal advice. Confirm the details for any property with the city, your lender and an attorney.
What counts as small multi-family
A duplex has two units, a triplex has three and a fourplex has four. According to Rocket Mortgage's explainer on FHA loans, standard FHA financing covers one to four units, including duplexes, triplexes and fourplexes, and properties with five or more units require different HUD or commercial programs. Loan rules vary by lender and program, so ask your lender how they treat the property you are considering.
Check zoning before you fall for a property
Fort Worth zoning decides what you can legally do with a lot. The city's zoning code includes a Two-Family ("B") District that provides a zone for a maximum of two dwelling units on a single lot. A duplex on a street does not automatically mean the zoning allows two units, and a legal nonconforming duplex may have limits on rebuilding or changes. Confirm the zoning for the exact address with the city before you go under contract.
Fort Worth rental registration
According to the City of Fort Worth:
Registration is voluntary for one- and two-family rentals with no violations, and mandatory for one- and two-family rentals with fire safety or public health violations.
Multi-unit complexes require annual registration.
The city's multifamily inspection and registration program applies to three or more units under the same roof, three or more on one lot under the same ownership, or three or more units on connecting lots all owned by the same person. It lists a $13 flat annual fee for each rental unit.
Out-of-state owners must designate a local agent to accept legal service and provide an emergency contact.
Rules change, so confirm the current requirements with the city.
Run the numbers on the whole property
Rent for each unit, and how you arrived at it.
Property taxes for the actual property. Non-homestead property is treated differently from a primary residence. The Fort Worth investment guide summarizes the Comptroller's rules on appraisal caps.
Insurance for a multi-unit building.
Vacancy across all units, not one.
Shared systems and repairs, such as roofs, plumbing stacks and parking areas.
Utilities, and how they are separated between units.
Management costs, if you will hire help.
My take: the seller's income numbers are a starting point, not the answer. Ask for leases, rent rolls, utility bills and repair records, and compare them with your own estimates.
Inspect the building, not just the unit
With more than one unit, you have more roofs, systems and tenants to check. Hire an inspector who is comfortable with multi-unit buildings, walk each unit if you can and ask about the age and condition of the shared systems.
Know the landlord-tenant basics
According to the Texas State Law Library, a landlord must refund a security deposit within 30 days after a tenant vacates, and generally must provide an itemized list of deductions. Talk to an attorney or a property manager about leases, repairs and evictions before you take on tenants.
Duplex and multi-family FAQ
Can I use an FHA loan for a duplex?
According to Rocket Mortgage's explainer, FHA financing covers one to four units, and at least one borrower must occupy the property as a primary residence. Ask a lender whether you qualify. See the house hacking page for more.
Do I have to register a duplex as a rental in Fort Worth?
The city says registration is voluntary for one- and two-family rentals with no violations, and mandatory if there are fire safety or public health violations. Confirm with the city for your property.
Is a duplex a better investment than a single-family rental?
It depends on the price, rents, repairs and your goals. Run the numbers on both and compare them, using conservative assumptions.
How do I check whether a duplex is allowed on a lot?
Confirm the zoning for the exact address with the City of Fort Worth. Do not rely on the listing or on what the neighbors have.
Want help evaluating a property?
If you are looking at a duplex or multi-family property, tell me what you have found or what you are looking for and we can talk it through. The investment property search page covers how to start looking.
Sources: City of Fort Worth zoning code, Two-Family District, City of Fort Worth rental registration, City of Fort Worth multifamily program, Rocket Mortgage on FHA multifamily loans, Texas State Law Library. This is general information, not investment, tax or legal advice.