Multi-Unit Rental Calculator
Run the numbers on a duplex, triplex, or fourplex. Model each unit's rent separately and see total cash flow, cap rate, and ROI.
Why small multifamily is different
Duplexes, triplexes, and fourplexes (small multifamily, or "2-4 unit residential") sit in a sweet spot for real estate investors:
- Residential financing — 2-4 unit properties still qualify for conventional residential mortgages. Five units and up requires commercial lending, which is harder and more expensive.
- Owner-occupant options — you can buy a 2-4 unit with FHA at 3.5% down or conventional at 5%, live in one unit, and rent the others (house hacking).
- Rent diversification — losing one tenant in a fourplex means 25% vacancy, not 100% like a single-family.
- Cash flow density — three rents from one roof, one furnace location, one yard. Operating costs spread across more units.
How the math differs from single-family
Multifamily uses cap rate as the primary valuation metric — even on small 2-4 unit deals, commercial-style underwriting helps. Cash-on-cash also looks better because higher gross rent produces more cash flow per dollar of equity.
Expense ratios tend to run slightly higher than single-family on a percentage basis:
- More tenant turnover (more units = more transitions per year)
- Common-area utilities you didn't have to pay on a SFH (hallway lights, shared water, exterior)
- Higher maintenance per unit because tenants don't treat shared property as well as a SFH
- More wear & tear on shared systems
A triplex at $525,000. You put 25% down ($131,250), with $14,000 in closing + light rehab. Loan: $393,750 at 7.0% / 30 years.
Rents: $1,650 + $1,575 + $1,500 = $4,725/mo gross rent, plus $125 from coin laundry.
Operating expenses (6% vac, 9% maint, 8% mgmt, 6% CapEx on gross rent; plus taxes, insurance, utilities):
This particular deal loses $270/month even at 2026 investor rates. To make it work, you'd need either a price reduction to around $495K, rents 5-7% higher, or significantly more down (lowering the mortgage). This is why aggressive 2026 buying still requires either off-market deals or value-add plays.
What to look for in a multifamily deal
- Separated utilities. Each unit on its own electric/gas meter is much better than one shared meter — tenants pay their own bills and you avoid disputes.
- Recent CapEx done. Older roof, HVAC, electric on multiple units can be six figures of work. Look for properties where major systems were recently updated.
- Strong rent comps. Are the current rents at market, below market (upside!), or above market (risky — they'll fall back to market on turnover)?
- Stable occupancy history. Ask for 24+ months of rent rolls. High turnover signals a problem.
- Off-street parking. Critical in most multifamily markets; tenants will pay $50-100/month for it.
- In-unit laundry. A significant rent premium and dramatically reduces tenant complaints.
Owner-occupied multifamily (house hacking)
The single best first-time investor strategy: buy a 2-4 unit as an owner-occupant.
- 3.5% down with FHA on up to fourplexes (county loan limits apply, but most metros allow this)
- 5% down with conventional on 2-4 units (recently expanded — used to require 15-25% for 3-4 units)
- 0% down with VA on 2-4 units if you qualify
- Owner-occ interest rate (0.5-1% lower than investor)
- You must live in one unit for at least 12 months
- After 12 months, move out and the whole thing becomes a rental
Run the numbers as both an owner-occupied scenario (with smaller down + you in one unit) and as an investor scenario (after you move out and rent all units). The owner-occ path is usually dramatically cheaper to enter.
Frequently asked questions
What's the difference between 2-4 unit and 5+ unit financing?
2-4 unit residential qualifies for conventional 30-year fixed mortgages with similar terms to single-family. 5+ unit commercial requires DSCR-based underwriting, typically 5-7 year fixed rates with 25-30 year amortization, 75-80% LTV cap, and significantly more documentation. The jump from 4 to 5 units is a huge financing cliff.
How do lenders count rental income?
For 2-4 unit owner-occupied purchases, most lenders count 75% of expected rental income from the non-owner units toward your qualifying income. They require an appraisal that includes market rent estimates for each unit.
Do I need separate leases for each unit?
Yes — each unit gets its own lease with its own tenants. Never put all tenants on a single lease; if one stops paying you have huge legal exposure to evict everyone at once.
What about the "1% rule" for multifamily?
The 1% rule applies to total gross rent vs purchase price. Multifamily deals often hit 0.8-1.0% in moderate markets and 1.0-1.4% in strong cash flow markets. Properties below 0.7% rarely work without significant value-add.
Are operating expenses higher on multifamily?
Slightly. Expect operating expenses (not including mortgage) to run 45-55% of gross rent on small multifamily, vs 40-50% for single-family. The extra few percent comes from higher turnover, shared utilities, and more maintenance interaction with tenants.
Numbers are estimates. Always verify rent rolls with actual lease copies, get a thorough inspection (multifamily inspections cost more), and pull historical operating expenses from the seller before committing.