A fourplex is a building that contains four separate housing units. The units can be side-by-side or stacked on top of each other, but most often, they’re a combination of both. There aren’t shared common areas in a standard fourplex; each residence has its own entrance, kitchen and bathrooms, although there may be a common foyer or entryway.
What is a Fourplex? Everything You Need to Know About These Multi-Unit Homes
Many people find that fourplexes are excellent investment properties. That’s because an owner gets four rental properties within one building – and often, even if all the units aren’t rented to tenants, the income from the rented units covers the cost of the mortgage. Some people even call these properties an “investment hack” because fourplexes can be incredibly lucrative with a relatively low investment.
Is a Fourplex an Apartment?
Fourplexes have four apartments inside one home. The building is generally medium-sized. That means it’s not as big as an entire apartment complex, but it’s usually bigger than a standard single-family home.
How Much Do Fourplexes Cost?
Fourplexes range widely in price depending on location, size, age and a number of other factors. Fourplex buildings are the largest properties you can invest in using an FHA loan, which makes them an attractive choice for many real estate investors.
Is a Fourplex a Commercial Property?
Fourplexes are not considered commercial properties when it comes to getting a home loan. They still qualify for conventional loans and government-backed loans.
Related: What is a triplex?
Is a Fourplex a Good Investment?
Fourplexes can be great investments when they’re in the right location and they’re properly managed. That’s not to say every fourplex you see on the market will be a good investment for you – in fact, you should talk to your financial adviser before you decide to buy a fourplex as an investment property – but in general, under the right conditions, fourplexes can bring in significant income.
There are several advantages to buying a fourplex as an investment property, including:
- Low price in relation to potential income
- The ability to rent out four homes rather than one, two or three – and all with one investment
- Simple management
Here’s a closer look at each.
#1. Low Price in Relation to Potential Income
When you can find a fourplex that’s priced right for its market, it may be the ideal investment. The reason many investors choose fourplexes is the ability to bring in four separate, independent streams of income.
#2. The Ability to Rent Out Four Homes Rather Than One, Two or Three – All With One Investment
You can rent out all four properties – or even live in one while renting out the other three – to cover your entire mortgage payment and bring in a profit. There’s less of a “vacancy burden” in a fourplex than what you’d encounter in a single-family home, duplex or triplex, as well. While a duplex owner loses half of his or her income with one vacant unit, a fourplex owner loses only 25 percent of his or her income.
#3. Simple Management
It’s generally easier to manage a fourplex than it is to manage four separate properties. Additionally, if one system in the house has an issue, you only have to repair it once to help all four tenants. In most cases, the best course of action is to hire a property manager – even if all your tenants are under one roof – because it simplifies everything (and usually ends up saving the homeowner a significant amount of time).
Related: What is a duplex?
Rental Info for Fourplex Owners
Ideally, you’ll be able to charge rent that’s at least equal to 1 percent of the property’s total price. If you buy a fourplex that’s $450,000, for example, you’ll want to rent out your units for a total of $4,500 per month in order to recoup your investment at a fairly quick rate.
As with any other investment property, location is everything. The property you purchase should be in an area where there’s high demand for rental housing – if it’s in an area with low demand, you may not be able to fill your space with tenants immediately (or at all).
Are You Buying or Selling a Duplex, Triplex or Fourplex in Silicon Valley?
If you’re selling a duplex, triplex or fourplex in Campbell, Cambrian Park, Los Gatos, San Jose, Santa Clara, Saratoga, Willow Glen or another community in Silicon Valley, we’re here to help. Call today or fill out the form below to find out about our innovative marketing plans that can put your investment property in front of all the right buyers.
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