A duplex utilized for income-producing purposes can be considered "commercial" real estate from the perspective that it is "business" real estate (non-owner occupied).
Duplexes are residential multiple family properties, just like 20, 50, and 100+ unit apartment buildings.
The use is what classifies these type of properties as "commercial" even though the asset class is residential.
For example, multifamily properties having more than 5 units are considered commercial because commercial financing is generally used to secure such properties.
The asset class hasn't changed (i.e. residential) but the financing has (e.g. commercial mortgage) due to the use of the property.
That is, 5 or more unit properties are usually purchased by investors and businesspeople, not by owner-occupants.
So lenders require a commercial or "business" loan.
On the contrary, lenders have decided that an owner-occupant is more likely to purchase a 2-4 unit property, in which case a residential loan is utilized.
But if an investor buys a 2-4 unit property for investment or "business" purposes, then the same financial fundamentals required to purchase a 5 or more unit building will apply (e.g. 10%-30% down payment, cash flow, positive DSCR, etc.).
So, in summary, a property's use ultimately determines whether it's commercial or not. Commercial real estate is any property that is used to produce income or related to a business activity.
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