How do I analyze a duplex, triplex, or fourplex?

Two-to-four unit properties sit in a sweet spot. They qualify for residential financing like a single-family house, but they earn like small commercial assets, with multiple rent checks spreading your vacancy risk. The analysis is mostly the same as any rental, with a handful of multi-unit specifics that cause most of the errors.

Get the income right, per unit

Underwrite rent per unit, never the listing's total. A fourplex advertising $4,400 in monthly rent could be four units at $1,100, or two at $1,600 and two at $600 that need work before they rent at market. Those are different deals. Get the current rent roll, the lease end dates, and your own estimate of market rent for each unit.

Watch the bedroom trap: a listing that says eight bedrooms means two per unit on a fourplex, and unit-level rent depends on that layout. Confusing total bedrooms with bedrooms per unit inflates rent estimates fast.

Multi-unit expenses run higher

Small multifamily typically carries expenses a single-family house does not: landlord-paid water, sewer, and trash where units are not separately metered, common-area electricity and upkeep, and more frequent turnover simply because there are more leases. Insurance is also priced differently on 2 to 4 unit buildings.

Ask two questions early: are the utilities separately metered, and who pays them today? A fourplex where the owner covers all water and trash can easily carry $2,000 to $3,000 per year in costs that never appear on a single-family pro forma.

A worked fourplex example

A fourplex is listed at $400,000 with four units renting at $1,100, or $52,800 per year gross. Deduct 7 percent vacancy ($3,696), then expenses: $4,752 management, $4,224 maintenance, $4,224 CapEx, $5,200 taxes, $2,800 insurance, and $2,400 in landlord-paid water and trash, a total of $23,600. NOI: $25,504.

With 25 percent down, the $300,000 loan at 7 percent over 30 years costs about $23,960 per year. Cash flow is roughly $1,550 per year, about $32 per unit per month, and DSCR is 1.06, below the 1.2 most lenders require. At the asking price, this deal does not pencil.

So work the price instead. At $340,000, the loan drops to $255,000, debt service to about $20,360, DSCR rises to 1.25, and cash flow to roughly $5,100 per year, about $107 per unit per month. That is the multi-unit version of a max offer: the price where the numbers clear, not the price on the listing.

Compare on per-unit numbers

Multi-unit deals are compared per unit: price per unit ($100,000 at asking in the example, $85,000 at the adjusted offer), rent per unit, and cash flow per unit. Per-unit framing keeps a $400,000 fourplex honest against a $200,000 duplex, and against other fourplexes in the same market.

The house hacking angle

If you plan to live in one unit, 2 to 4 unit properties qualify for owner-occupied financing, including low down payment FHA loans, and lenders will count a portion of the other units' rent toward your qualification. Underwrite it twice: once as an owner-occupant, asking whether the other units cover most of your housing cost, and once as a pure rental for the day you move out.

A property that only works while you live in it for free is a housing decision, not an investment. Knowing which one you are making is the point of running both versions.

Running the multi-unit math

You can run the full analysis, per-unit rents, expenses, financing, and the resulting metrics, in Realastat's free rental property calculator. Whichever tool you use, insist on the rent roll, the real utility bills, and per-unit numbers before you write the offer.