Buying a Duplex in Richfield: Zoning and ROI Basics

Thinking about house hacking or adding a small multifamily to your portfolio in Richfield? You are not alone. The city made duplexes easier to build and own, but the numbers and rules still matter if you want solid returns. In this guide, you’ll learn how Richfield’s 2023 zoning update applies to real properties, what licenses you need, the inputs that drive ROI, and simple math to model cash flow. Let’s dive in.

Richfield zoning update

In January 2023, Richfield approved zoning changes that allow two-family dwellings in areas that previously focused on single-family homes. Duplexes are now permitted by right on many lots that meet dimensional standards, which lowered a key barrier to “missing-middle” housing. Local reporting notes that while the rules opened the door, activity has been gradual and very site specific. Coverage of the zoning change and subsequent updates confirms the shift.

What does that mean for you? If the lot meets minimum size, width, setback, design, and utility standards, a duplex can be permitted, subject to standard permits and reviews. The change does not override parcel-level rules, so frontage, parking, and any overlay constraints still apply. Local coverage also points out that adoption has been incremental as projects pencil case by case. A broader look at metro “missing-middle” efforts highlights this trend.

Property due diligence checklist

• Confirm the exact zoning, permitted use, and dimensional standards with Richfield planning staff.
• Verify minimum lot width and area, required setbacks, maximum lot coverage, and any unit size standards.
• Ask about parking minimums, site plan review, and whether variances are likely for your concept.
• Check subdivision rules if you plan to split a lot or attach units at the lot line.
• Screen for overlays or constraints, such as proximity to arterials or airport airspace.

Rental licensing and STR rules

Richfield requires rental properties to be licensed and inspected. Plan for an application, inspection timing, renewal, and potential reinspection fees if repairs are needed. You can review a city-focused summary of licensing and renewal procedures through the Airbnb city guidance page and confirm details directly with city staff.

If you are considering short-term rentals, note that the City Council has discussed tighter rules, including longer minimum stays when the owner is not on site. Before you buy, check the latest language and licensing requirements because STR rules can affect revenue. See recent reporting on Richfield STR discussions and confirm the final ordinance with the city.

For homes built before 1978, federal lead-based paint disclosure rules apply when you sell or lease. Review the EPA’s overview of lead hazard disclosures for real estate and factor any potential remediation into your budget.

Market inputs for returns

Your ROI depends on a few local variables. Collect the following before you write an offer:

• Purchase price and comps for duplexes near your target block.
• Market rents by unit type and rent comps for similar duplex units. See Richfield rent trends for a starting benchmark.
• Vacancy rate. Many investors model 3 to 7 percent for inner-ring suburbs.
• Operating expense ratio. A common range for small duplexes is 30 to 45 percent of effective rent, depending on who pays utilities and whether you self-manage.
• Property taxes. Use the county portal for parcel-level taxes and timing. Start with Hennepin County property taxes for how assessments and bills work.
• Mortgage rates and terms. National 30-year averages in 2025 have hovered around the mid-6 percent range, per Freddie Mac’s weekly survey, which can materially change cash flow.

Financing options for 2 units

Owner-occupants have meaningful advantages. Fannie Mae’s current approach allows some owner-occupant buyers to put as little as 5 percent down on 2 to 4 unit properties, subject to lender requirements and reserves. Review the Fannie Mae selling guide and talk with a lender who regularly closes duplex loans.

FHA can be a fit too. With FHA, owner-occupants can finance 1 to 4 unit properties with down payments as low as 3.5 percent, within county loan limits and program rules. Start with HUD’s overview of FHA 203(b) and ask your lender about overlays, reserves, and how rental income is used in underwriting.

Simple ROI math

Core formulas

• Gross Annual Rent = monthly rent per unit × units × 12
• Effective Gross Income (EGI) = Gross Annual Rent × (1 − vacancy rate)
• Operating Expenses = EGI × expense ratio, or sum of line items
• Net Operating Income (NOI) = EGI − Operating Expenses
• Cap Rate = NOI ÷ Purchase Price
• Annual Debt Service = annual principal + interest payments
• Cash Flow Before Taxes = NOI − Annual Debt Service
• Cash-on-Cash Return = Cash Flow Before Taxes ÷ Total Cash Invested

Sample duplex scenario

Assume a purchase near Richfield’s median price at $338,500 and rents of $1,150 per unit. Gross Annual Rent is $27,600, and with a 5 percent vacancy, EGI equals $26,220. If you model operating expenses at 40 percent of EGI, NOI is about $15,732.

With 20 percent down and a 30-year fixed near the mid-6 percent range, annual debt service could be about $20,112. That produces slightly negative cash flow in this setup. To improve outcomes, you could seek below-market acquisitions, raise units to market rent with upgrades, reduce expenses by self-managing, or change the capital stack by increasing the down payment or securing a better rate.

Taxes, insurance and costs

Hennepin County assesses values as of January 2 each year, with valuation notices mailed in spring and taxes set later based on local levies. Use the most recent bill for underwriting, and recognize that classification or assessed value changes can move your tax line. Start your research with the county’s property tax resources.

Budget for landlord insurance, liability coverage, and loss-of-rent protection. Check for any pending special assessments, and decide early how you will handle utilities and meter separation. Set a capital reserve per unit each year, especially for older buildings.

Step-by-step buying plan

1. Confirm zoning and permitted uses for the parcel with Richfield planning. Local coverage of the 2023 zoning change is a helpful primer.

2. Pull rent comps and recent duplex sales near your target block. Use neighborhood-level rent data like the Richfield rent trends page as a starting point, then verify with current listings.

3. Get preapproved with a lender experienced in 2-unit, owner-occupied loans and ask about reserves. Review the Fannie Mae guide and FHA basics for down payment options.

4. Plan for rental licensing, inspections, and renewal timing. A city-focused summary is available via Airbnb’s help center, then confirm specifics with Richfield.

5. Inspect for lead hazards in pre-1978 homes and price repairs accordingly. Use the EPA’s lead disclosure guide for what you must provide to tenants.

6. Model base, best, and conservative cases. Vary rents, rates, expenses, and taxes to see how your cash-on-cash return moves.

Is a duplex right for you?

Richfield’s updated rules make it easier to buy or create a duplex, and the numbers can work if you are thoughtful about price, rents, and financing. If you want help finding lots that meet standards, pressure-testing your pro forma, or planning renovations that justify higher rent, let’s talk.

Ready to plan your Richfield duplex move? Connect with Nene Matey-Keke for neighborhood-level insight, clear numbers, and a step-by-step plan.

FAQs

What did Richfield change about duplex zoning in 2023?

• The city made two-family dwellings a permitted use on many single-family lots that meet standards, lowering barriers while keeping parcel-level rules in place, per local reporting.

Can you convert a single-family home to a duplex in Richfield?

• It depends on lot size, width, setbacks, design, utilities, and building code; the 2023 update helps, but you must confirm standards with the city and secure permits, as noted in coverage of the change.

What financing options exist for owner-occupant duplex buyers?

• Many buyers use conventional loans that allow as low as 5 percent down for 2 to 4 unit owner-occupied properties or FHA with 3.5 percent down, subject to reserves and program rules; see Fannie Mae and HUD FHA.

What rents can you expect for Richfield duplex units?

• Recent estimates for 1 and 2 bedroom units in Richfield commonly range around the low to mid teens per month, but you should verify with current comps; start with rent trend data and active listings.

How do Richfield property taxes affect duplex ROI?

• Taxes are a major operating cost that can shift with assessment or classification changes; use the latest bill and the county’s property tax page to model conservative scenarios.