House Hacking MultiFamily versus Single Family Home

5 Replies

Hi BP community! 

This is my first post in awhile. I am looking to buy my first property and househack it! Houses in my market are are at least 400k because I am in Northern California. Ideally, I would like to have a multifamily home because it makes more money but I am not sure if it is a better idea to get a SFH. What are common pitfalls to look for when house hacking? How much money do I need for down payments on a SFH versus a multifamily? The down payment is going to be my biggest problem along with tenants. Please share any useful information or tips you have,

thank you,


@Cody Evans

If it’s not a primary residence then 20%. Go multi if you can get a good buy, add value by separating utilities, or force other appreciation.

Talk to a mortgage person first. Some multi, even if primary residence, will require 25%. Also it may be hard to get a loan on a multi if you have no landlord experience. A duplex will be easier to get a loan on than a 4-plex. But 4-plex scales the best.

For a first-timer, you might also look into condos, especially in the expensive NorCal. Yes the HOA will add to your expenses, but you also don't need to pay for fire insurance, outside maintenance, long-term capital improvements such as new roof, water, trash, and whatever is in the community such as a pool or gym. A new roof on a SFH may cost 15-20k in Norcal, more for multi. That's many years of HOA if a community just recently re-roofed. Do your numbers and see if they work out.

Of course, the practical differences are whether you will have room renters living in the same dwelling with you (SFH) or in separate units (2-4 family). The 2-4 family will most likely cost more.

@Frank Hinck I am going to be using it as a residence and then renting it out is the plan. I may eventually move but don't plan on it: How does this affect my down payment? Is there a recommended loan structure to go after such as FHA?

@Cody Evans

If it's your first residence then you can get FHA, and the lower interest rate which stays in place once you move but I believe you have to live there 2-5 years so you don't have to pay taxes on it as a flip. Then when you move into the next you'll get the good interest rate again since will be your primary residence (again).

Not to be a Debbie Downer but what rent do you think you'll get for the $700k home, probably unlikely it'll make the 1% rule? Will it even cover the PITI?