A multifamily property is a residential building containing more than one separate housing unit, ranging from a duplex or triplex up to large apartment complexes. Each unit typically has its own kitchen, bathroom, and living space.
Multifamily properties are popular with investors because they generate rental income from multiple units under one roof. Smaller multifamily buildings, generally two to four units, can often be financed with residential mortgages, while larger ones use commercial financing.
A common strategy is house hacking, where an owner lives in one unit and rents the others to help cover the mortgage. Investors evaluate multifamily properties using metrics like net operating income, cap rate, and cash flow. Local zoning determines where multifamily housing is allowed.