Duplexes, Triplexes, and Quads are NOT Multifamily!!

[Michael Swan]

Hi this is Swanny,

Please realize that single family, duplexes, triplexes and quads are valued based on Comparative Values or commonly known as Comps. You are at the mercy of comps when you buy, sell, or refinance these products. NOI and Cap rates have nothing to do with the valuation when you buy or sell either.

Now if you have a true apartment complex with 5 units or more, that is Multifamily. NOI, Cap Rates, etc... are ALL important when buying, selling or refinancing these products.

Hopefully, that helps a little for newbies that are asking these questions.  It is like comparing apples to oranges.  There is a world of difference between the two.

There is no comparison between the loan product on a 4 unit or less, fixed 30 year loan and 5 units or more Apartment loan 5+5 20 year amortization commercial loan and other variations.

On true Multifamily, every year, your lender needs to see your operating statement, tax returns, and demand you keep that DCR at 1.25 or higher and if not, need a plan to fix this problem. The bank's credit analyst watches carefully every year about tax time. Be very careful!!

Single family, on the other hand,  4 units or less is much less complicated, but you are at the TOTAL mercy of comps.  That is great when 4 units or less are rising across America like they are now.  However, when prices plummet, you are also at the mercy of comps too.  It is a double edged sword with single family.

There is a world of difference between single family (4units or less) and Multifamily (5 units or more). There are soooooooooo many many more differences, much more to list.  Maybe the rest of you that have apartment complexes (5 units or more) can add to my list.

If you don't know what you are doing, you can lose your you know what with true Multifamily. There are many land mines the u informed or inexperience could step on.  Although, the rewards on Apartment complexes are exponential if you know what you are doing!!!!

Swanny