2 family vs 5 family requirements - MA

[Mark Derby]

I'm looking at a 5 family that is about to hit the market and was wondering what the different requirements are for things like fire alarm, trash service, etc. versus a up/down two family house.

Other than 60% more tenant BS to deal with, what are some of the other considerations?

[Marcia Maynard]

Financing. We were able get a conventional loans on an 8-plex because it was essentially 4 duplexes grouped together on two tax lots. The fact they were on two tax lots and only 4 units per lot was our saving grace. @Jon Holdman is right about the financing, check it out.

Garbage. For garbage service we were required to get a dumpster, not individual bins. Our local waste management company (garbage and recycling) allow individual bins for 4 or less units, but require a dumpster for more.

Parking. Parking can be a challenge. There are multiplexes nearby our 8-plex that don't provide enough parking and their cars are all over the local streets. Look for at least one space per unit of off street parking, preferably more. Also, if you have a parking lot, think about surface maintenance and striping and signage.

Mail Service. In some areas, having more units requires a mailbox bank instead of individual mailboxes at each unit.

Utilities. Check to see if the utilities are separately metered. If not, then you will need to have the utility in your name, not the tenants'. There are options such as converting to separately metered utilities or submetering or factoring your cost into the rent.

Marketability. Larger plexes attract a different kind of tenant than you will find for a SFH or duplex. Especially if the units have a shared laundry room instead of individual in-unit hook-ups. Also, yard space is a consideration, as there is usually less per unit and more common shared area. They market like apartments.

Attitude. Requires a different attitude on the part of the owner and manager. You are dealing with more people in close proximity to each other with more shared spaces. There are challenges. Better have good people skills and good policies & procedures in place. If you go into it thinking about "more tenant BS to deal with" then that is what you will get. If you change your perspective about that, you could enjoy many profitable years with this kind of investment.