Real Estate
Multi-Family
Duplexes through large apartment complexes. Multiple income streams from a single acquisition — and financing that often scales better than single-family.
How It Works
You acquire a property with 2 or more units and collect rent from multiple tenants. Vacancy risk is spread across units — losing one tenant doesn't zero out income. Smaller multi-family (2–4 units) can qualify for residential financing, which is more accessible than commercial loans. Five units and up shifts to commercial underwriting based on the property's income.
Value-add multi-family is one of the strongest strategies: buy a mismanaged or underrented property, improve operations and rents, then refinance or sell at the higher NOI-driven value.
Financing
- • 2–4 units: Conventional residential financing available (lower rates, easier qualification)
- • 5+ units: Commercial lending — underwritten on property income (DSCR), not personal income
- • Value-add: Bridge loan to stabilize, then refinance into permanent financing
- • Agency loans: Fannie/Freddie multifamily programs for larger stabilized assets
Key Numbers to Know
- • Cap Rate: NOI divided by purchase price — the core valuation metric for 5+ units
- • DSCR: Debt Service Coverage Ratio — lenders want 1.25x or better
- • GRM: Gross Rent Multiplier — quick way to compare properties
- • Vacancy rate: Market vacancy directly affects underwriting and projections
What Kills These Deals
- • Underestimating deferred maintenance on acquisition
- • Overestimating rent growth or stabilization timeline
- • Buying at a cap rate that doesn't support the debt
- • Not stress-testing vacancy in projections
Evaluating a multi-family deal? Send me the numbers and let's look at them together.