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Buying a Fourplex

Alyssa Strom
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Buying

Ask any experienced real estate investor the one piece of advice they would give to new investors and they would all say “buy a fourplex”. Purchasing and owner occupying a fourplex is the best way to get started in real estate investing.

Now you’re probably asking why? While no purchase is without risk here are the main pros (and cons) of buying a fourplex:

Pros

  • More units equal more rent and reduced vacancy risk. If one of your tenants moves out and you have a month without rent you still have other units covering your mortgage payment
  • Low down payment options (if you owner-occupy). If you are willing to live in one of the units you can get into a fourplex with a significantly smaller down payment. We’re talking as low as 3.5% if you are using an FHA loan. Typical down payment amounts for investment properties range from 15%-25% down. 
  • You are maximizing the number of doors you can leverage with residential financing. The benefit of residential financing is that you get longer loan terms and lower interest rates than commercial loans.

Cons

  • More units can mean a higher maintenance and repair budget. There are simply more furnaces, water heaters, and appliances to take care of. 
  • Limited inventory – only 55 fourplexes sold in 2018 across the entire state. With limited supply and increased interest in real estate investing, prices of fourplexes have been driven up.

Sold on the idea of buying a fourplex? We’d love to help you with your search.

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