Multifamily Investing in the US: Duplexes to Small Apartment Buildings

Why Multifamily?

Multifamily properties — from duplexes to 50-unit buildings — spread vacancy risk across multiple doors. Lose one tenant in a single-family rental and income drops to zero. Lose one in a fourplex and you still collect from three.

US investors often start with a house-hack duplex (FHA-friendly) and scale into small commercial multifamily as portfolios grow. Financing, valuation, and management all shift as you cross from residential to commercial lending thresholds (typically 5+ units).

Analyzing Multifamily Deals

Multifamily underwriting is unit-driven. Calculate rent per door, expense ratio per door, and replacement reserves per unit. Commercial lenders focus on DSCR and NOI — not your personal income — once you are in commercial loan territory.

• Gross Potential Rent — all units at market rate, fully leased
• Vacancy & credit loss — typically 5–8% in stable assets
• Operating expense ratio — often 35–50% for smaller multifamily
• Per-unit capex reserves — $250–$500/unit/year is a common planning range
• Cap rate and cash-on-cash — compare to local sales comps

Financing Pathways

1–4 units generally qualify for residential investment loans (higher rates than primary, 15–25% down typical). Five or more units shift to commercial mortgages — shorter terms, balloon payments, and recourse in many cases.

DSCR loans have opened multifamily access for investors who cannot qualify on W-2 income alone. Run DSCR on each deal before applying.

Scaling Smart

Start with manageable assets — a duplex or fourplex in a market you understand. Build property management systems before you chase unit count. Our cash flow and cap rate calculators work per property; scale by running the same process on every asset.