What Is a Multifamily Home?

Houses for sale in Ottawa

Purchasing a multifamily home is often considered one of the best ways to get into real estate investing. They offer numerous advantages over other options yet aren’t without their own challenges. Therefore, it’s essential to understand the basics before deciding whether it’s the right choice for you.

The Basics

A multifamily home is basically any single property with more than one residential unit. The owner of a multifamily property may live in one of the units and rent out the others to tenants. Alternatively, they can live elsewhere and rent out all the units.
Generally, a multifamily home will have up to four individual units. In both the U.S and Canada, any building with five or more units is considered a commercial property, and different rules and processes apply when purchasing them.

Types of Multifamily Homes

Multifamily homes come in various shapes and sizes. Below, we’ve listed the most common you’ll find on the market:

  • Duplex: A duplex refers to a home divided into two units by a common wall or ceiling. It’s essentially a semi-detached house in which a single owner owns both units. Each unit has a private entrance and outdoor space, and there aren’t usually any communal areas.
  • Triplex: A triplex is similar to a duplex but has three residential units rather than two.
  • Quadrex: Finally, a quadrex, sometimes called a fourplex, is more or less the same and has four residential units.

Each of these multifamily homes will share a foundation and roof, but the units are self-contained, with private kitchens, bedrooms, bathrooms and other living areas. They sometimes also have a yard.

Each type can have the units stacked upon one another, but they can also be lined up in a row. In some cases, there will be a mix of units, both side by side and on top of one another.

 

 

The Pros and Cons of Investing in a Multifamily Home

Buying a multifamily home enables you to enjoy numerous benefits, but it’s essential to understand that it’s not all plain sailing.

Pros

Here are some of the advantages of owning a multifamily home:

  • Ability to live in one of the units: By living in one unit and renting out the other(s), you’ll have more control over repairs, a closer relationship with your tenants and better cash flow. The rent you get from your tenants will help cover not only your mortgage but also your housing costs.
  • Tax benefits: As a property investor, you can include home repairs and interest payments from your mortgage as business expenses.
  • Wider pool of tenants: The more units you have to work with, the quicker you can earn back your investment.

Cons

But while there are several benefits, there are some potential disadvantages to consider:

  • Landlord commitments: Being a landlord can take a chunk of your time, and you bear many responsibilities. Tenants may be knocking on your door with issues at all hours, so don’t take it lightly. You’ll also be responsible for all repairs and maintenance.
  • More expensive: Compared to a single-family home, you can expect to pay much more for a multi-unit property. Some lenders may also require a larger down payment.
  • Financial risk: There may be times when you don’t have tenants or they’re late with payments. You’ll still need to keep up with your mortgage payments, which can cause financial strain. It’s essential to have a substantial emergency fund.

Looking for multifamily homes for sale in popular areas across Canada and the U.S.? Check out the links below:

Multifamily homes for sale in Toronto
Multifamily homes for sale in Edmonton
Multifamily homes for sale in Calgary
Multifamily homes for sale in Hamilton
Multifamily homes for sale in Moncton
Multifamily homes for sale in Ottawa
Multifamily homes for sale in Montreal
Multifamily homes for sale in Vancouver

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