Duplex Vs. Fourplex: Pros/Cons of each?

Question

I'm looking into buying my first multi-family property that I plan on using as a house hack.

Can someone talk to me about, or point me to a resource, on the pros/cons of Duplex vs. Triplex v. Fourplex?

Sung Park · Answer

@Michael Trabert Not sure how abundant MFs in areas you are interested in investing/living in but for me, the MFs that come up where I'd want to live/invest are rare and even rarer at a decent price so it's slim picking regardless of how many units. Whether a 2,3,4 unit, it is really a matter of personal preference, your budget, and the local inventory. The more units, the more likely it may cashflow when all units are rented out but not always. Based on your question though, don't get catch up in how much it will cashflow while you live there because most househackers don't cashflow on the MF they occupy. What matters most is the money saved on housing expense, the low downpayment and great mortgage rate for an MF due to owner occupancy advantage, and learning to property manage. It should definitely cashflow once you leave and all units are rented out based on current rents, not hypothetical rent appreciation in some distant future.

Marc Middleton · Answer

Well living with 3 other people in a 4plex isn't for everyone. Unless you can get a house with a triplex in the backyard (I just saw one pop up in central for Miami for about $850k).

A duplex will usually give you a private yard and/or private parking. A 4 plex usually has people living on top or below you, plus there is more maintenance.

But your mortgage payment will be next to nothing if you can stick it out for 1-2 years until the next one!

Marc Middleton · Answer

sounds about right.

And I'm new to this 'house hacking' term -no one in real estate (at least in Florida) uses it unless its a Bigger Pockets member or millennial, but from what I gather, to house hack is to buy a home and then rent out the bedrooms to offset your mortgage. Just buying a duplex and living on one side isn't a real 'hack', its what you are supposed to do with a duplex.

Marc Middleton · Answer

Well anything an owner lives in would be called that. But to 'hack' a house, would be to rent out all the rooms.

Michael Trabert · Answer

@Marc Middleton Ha! Is it just called 'owner-occupied' in more formal terms?

Michael Trabert · Answer

@Sung Park Awesome. So let me make sure I have this right: I should do the deal analysis as if I was going to rent out both sides. If the property would cashflow now with both sides rented then it is a good deal as rent prices should go up in the two years I live there.

Michael Trabert · Answer

Thanks, Marc!

I've gone back and forth on this, and I think that a duplex is probably the best idea since we have to live in it.

What are your thoughts on house hacking? Should you only go in on a duplex that would cashflow if you hypothetically were to rent both units OR is it ok to take out an FHA loan and then waiting for the rents to go up to a decent cashflow before moving out?

Duplex Vs. Fourplex: Pros/Cons of each?

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