When you invest in single family homes as rental properties that are miles away from each other around the city, the operating expenses are higher and management is more intensive than if you had owned a 2 to 4 unit investment property where all the units are on one parcel of land.

Tax Benefits
You are able to deduct the mortgage interest for the unit you live in. If it is a duplex, you deduct one-half of mortgage payment. For a triplex, one-third. For a fourplex, one-fourth. The mortgage interest for the rented units will be listed on schedule E of your 1040 tax returns.

 Cash Flow
Always make the sure property has decent cash flow when purchasing and especially so if applying for a DSCR investor mortgage. Let’s say the mortgage payment is $1,967 each month with a $400,000 balance at 4.25%, property taxes of $468 and $125 for insurance.

If you receive rental income of $1,400 for each unit in a triplex, you are cash flow positive without factoring in vacancy loss or capital expenditures. Moreover, you can comfortably forecast that your units will have higher rental income in 5-10 years with inflation and as tenants move.


Having four separate groups of tenants might bring a whole new level of problems than a single-family home tenant consisting of a couple or small family. Tenants in multifamily properties are typically more prone to move and live in the units for shorter time frames, which likely translates to higher expenses.

There’s a higher potential for emotional tension among tenants. As the landlord, you are responsible for some of those matters. The news reported that some local law enforcement departments and cities are sending bills to the property owners when they respond to calls for nuisance by their tenants.

A perfect way to avoid this is to perform a background check on your prospective tenants and have guest rules written into the lease. This can do wonders for peace of mind.

If you have one irresponsible tenant, their single problem can easily blow up and trigger additional problems for your other tenants. This would include a shower, tub, or dishwasher leaking into other unit(s) damaging the flooring and ceiling of the lower-level tenant in a two-story property.

If the thought of actively managing a building frightens you consider using a property manager which is usually an expense of 10 percent of the monthly rental income.

Currently, there are no mortgage loans that offer 5% down for a 3-4 unit property. Although, with an FHA mortgage, a 3 1/2 percent down payment may be possible if the rents meet the self-sufficiency test and if you will move into one of the units for 6 months to a year.

Final Thoughts
The important takeaway is that making an investment in a duplex, triplex or a quadplex is certainly among the choices available, and for some investors it’s a smart move. Be aware of your own personal finances, your strengths and weaknesses, to figure out if being an owner of a rental property is the right choice.