Multi-Family Housing
Multi-family housing includes duplexes, triplexes, and apartment buildings. Learn ownership types, financing, and investment benefits.
Definition
Multi‑family housing refers to residential buildings designed to house multiple separate households within one structure or complex. Examples include duplexes, triplexes, fourplexes, apartment buildings, and condominiums. Investors may live in one unit and rent the others (house hacking) or rent all units as income property. Financing multi‑family properties often involves commercial or residential mortgages depending on the number of units (conventional residential loans up to four units; commercial loans for five or more). Multi‑family investments can provide steady cash flow and economies of scale but require active management and maintenance.
Why It Matters
Four units is the wall. At four or fewer you can use a residential loan, put as little as 5 percent down on an owner-occupied purchase, and count part of the projected rent toward qualifying. At five units you enter commercial underwriting: 25 percent down, shorter terms, rate resets, and approval based on the building's cash flow instead of your paycheck.
Examples
Five percent down on an FHA loan buys a Tacoma triplex at $780,000. The owner occupies one unit and collects $3,200 a month from the other two against a $5,100 payment.
A 6-unit building in Spokane at $1.1 million requires $275,000 down on a commercial loan amortized over 25 years with a rate reset in year seven.
Washington's middle housing law lets an owner in a city over 25,000 people build up to four units on a lot zoned for one, turning a $650,000 teardown into a fourplex project.
Tips
Demand 12 months of actual rent rolls and matching bank deposits instead of a pro forma. Sellers routinely advertise market rents on units currently leased $400 below them.
Confirm whether units are separately metered for water, sewer and power. Master-metered buildings push every utility increase onto you and are expensive to submeter later.
In Seattle, verify tenant status before writing the offer. Just cause eviction rules and relocation assistance can make it impossible to deliver a vacant unit for you to move into on closing day.
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