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What are multi-family homes?

A Georgian-style duplex home in Savannah, Georgia
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Multi-family homes can be a great way for novice real estate investors to get started buying properties that will generate passive income. However, these properties have some challenges that single-family homes don’t have. If you’re considering buying a multi-family home, here’s what you need to know before jumping in.

What is a multi-family home?

A multi-family home is a single building that’s set up to accommodate more than one family living separately. That can range from a duplex, which has two dwellings within a single building, to homes or small apartment buildings with up to four units. (Buildings with more than four units are considered commercial properties.)

The owner of a multi-family home can either live in one of the units and rent out the others, or live on another property and rent them all out. If you don’t live in the property, you’re considered an investor, and the rules for getting a mortgage are different. You may be able to use the projected rental income from the property to help you qualify for a mortgage, and you may also qualify for a higher loan amount.

“When you’re looking at a single-family home, you’re thinking about your own needs only,” explains Charlotte Winckowski, a sales associate with Re/Max Central Group in Toledo, Ohio. “When you’re looking at a multi-family home, you have to think of it more as a business: What will the needs of your tenants be? What kinds of income will it produce and what will your expenses be?”

Multi-family home vs. single-family home

While you can rent out some or all of a single-family home, multi-family homes have other distinct characteristics. Each unit in a multi-family home has a different address, their own kitchens and bathrooms and typically their own entrances. Those living in multi-family homes may have less privacy than those living in single-family homes because of shared walls.

Some multi-family homes started out as large single-family homes that an owner or developer decided to divide into more than one property.

Pros and cons of investing or living in a multi-family home


  • The income the property earns from renters can help offset the cost of your mortgage and other housing expenses, providing you with an income stream. “For some owners, the rent is enough that they don’t have a house payment at all,” says Paul Wyman, managing broker of the Wyman Group in Kokomo, Indiana. “They’re able to use income from other units to cover their mortgage, [property taxes and homeowners] insurance, and that frees them up to use their cash for other things.”
  • You’ll be able to tackle repairs and maintenance more easily. If you live in or close to your rental property, it’s less likely you’ll miss major issues and you’ll be able to respond faster when problems arise.
  • You can write off much of your home maintenance as a business expense and prorate part of your mortgage interest payments.
  • It can be an ideal option for multi-generational families who want to be close but retain their privacy (or helps you keep the option open in the future).
  • If you ultimately move out of the property and into your own home, you can still keep it as an income-producing investment, earning even more once you start renting out your own former unit.


  • Since you’re buying more than one unit, it may cost more upfront to purchase a multi-family home than it would to buy a single-family home.
  • Being a landlord is a time commitment, and living in the immediate vicinity of your tenants means you may get knocks on your door at any time for questions about maintenance or repairs. You’ll also need to make sure that you’re comfortable negotiating lease terms and screening your tenants.
  • If your units go vacant or a tenant is late with the rent, you’re still responsible for paying your mortgage. You also have to cover the cost of (quickly) repairing problems like a leaky roof or clogged toilet. “Even if you don’t have a housing payment every month, there is still financial risk in multi-family homes,” Wyman says.
  • You’ll need a substantial emergency fund. The more units you have, the less impact an individual unit will have on your overall cash flow, but landlords should have an emergency fund set aside to cover unexpected repairs as well as rent on vacant units.
  • It can be more complicated to sell a multi-family property that has tenants, since you’ll need to coordinate showings and appraisals — and keep the tenants apprised of the process.
  • You need to be able to deal with tenants in a business-like way when the rent is overdue, there are issues with noise or there’s damage to the property, to name but a few of the problems landlords can face.

Maximizing returns on a multi-family home

In most cases, a multi-family home will also serve as an investment property for the owner. Real estate remains Americans’ top choice for long-term investment.

In order to maximize your investment, it’s important to understand the costs associated with the property, including not only your mortgage, property taxes and homeowners insurance, but also other expenses such as utilities, real estate agent fees, advertising (to attract tenants) and legal fees.

“An evaluation of the property should include an inspection by a licensed inspector and market research to include a market lease-rate analysis along with current market rental conditions,” Wyman says.

Who are multi-family homes best for?

Multi-family homes are best for those who are interested in getting into real estate investing and are comfortable with the added responsibility and time commitment that comes with being a landlord. They can also be a smart choice for multi-generational families interested in buying a property together while having their own dedicated space.

How to find a multi-family home

Like single-family homes, multi-family homes are listed for sale on real estate search websites, where you can typically filter the results of your search based on the type of property you’re seeking.

A real estate agent, either with a residential or commercial specialty, may be able to help you find investment opportunities in your area, as well, and could even know of some opportunities that have not been advertised online.

As with any house hunt, do your homework to see what multi-family home prices are like in your market and what you might expect to pay.

Find other housing types:

House type Who it’s right for:
Apartment Apartments are suited for anyone looking to stay in a prime location for a cheaper price near shopping, restaurant and entertainment centers, often at a more affordable cost than buying a condo or single-family home.
Condominium Condos appeal to those looking for a lower-maintenance living, home with a sense of security, opportunities to be social with neighbors, among other factors.
Townhouse Townhouses are a particularly good option or first-time homebuyers or other budget-minded home buyers who want more space than typically afforded in a condo.
Modular home Modular homes are enticing to empty-nesters looking to downsize, couples looking for backyard units like tiny homes or families looking to upgrade their dated properties in nice but expensive neighborhoods.
Single-family home Single-family homes are best for families who prefer a huge yard and plenty of room to spread out. Others still prefer a low-maintenance condo or townhome that includes benefits like landscaping, snow removal and exterior maintenance.
Multi-family home Multi-family homes are best for those who are interested in getting into real estate investing and are comfortable with the added responsibility and time commitment that comes with being a landlord.
Bungalow home At between 1,000 and 2,000 square feet, bungalows are a great option for young families looking for a starter home or retirees hoping to downsize in a home without stairs, or single homeowners who want the single-family home lifestyle without managing a huge property.
Co-op Co-ops are most often found in major cities, and they can be good for those looking for security or neighbors who largely adhere to the building’s rules and policies.
Patio home Typically capped at one-and-a-half stories and part of a larger association, patio homes are best for homeowners who don’t want to deal with stairs or maintenance.
Ranch home Ranch homes are ideal for anyone who prefers single-story living. Singles, couples and families with children can find something to love about a ranch home.
Written by
Beth Braverman
Personal Finance Expert Contributor
Beth Braverman is an award-winning freelance journalist and content producer, writing mostly about personal finance, parenting and careers.
Edited by
Mortgage editor
Reviewed by
Senior mortgage loan originator, American Fidelity Mortgage