Small multifamilies are scarce. Should I go smaller, bigger, or stay the course?

[Elaine Raymond]

I’m a first time investor looking to househack with a small multifamily (duplex, triplex), but they are scarce and competitive in my area. I’m not interested in renting out a room in my primary residence for safety and privacy. Should I go smaller (e.g., house with a mother-in-law suite) or bigger (e.g., small apartment complex)? Frankly I haven’t considered going bigger until now because I’m intimidated by the idea. 

[Ryan Thomson]

@Elaine Raymond 

Going bigger than a fourplex will require a LOT more down and higher interest rates. I would stick to residential multifamily or below. 

Here is what I look for in single family: an easy way to split into multiple units, a walk out basement, an ADU, a garage I could convert, or lots of bedrooms.

Run the numbers and see what works best. Reducing your living expenses and considering the net worth ROI of owning real estate, paying down your mortgage, long term appreciation, and tax benefits will make it a great investment.

[Alli Breighner]

Hi Elaine! 

I'd love to discuss all of these details with you and get the ball rolling for your first investment. 

Feel free to shoot me a DM, I'd love to chat!

[Michael Dumler]

@Elaine Raymond, anything larger than 4 units is considered commercial. As noted by Ryan above, going commercial will make things much more difficult than you need them to be for your first deal. Focus your criteria on single-family homes with an in-law suite and small multifamily. I may have already asked this in your last post, however, what submarkets are you targeting? Feel free to reach me via cell or email if you have any additional ATL house hack questions (contact info is listed in my bio). 

[Noah Waldron]

Hi @Elaine Raymond,

We ran into this same issue a couple of years ago and decided to do the basement house hack as a substitute for a traditional duplex. Our rent almost totally covers our mortgage. My wife had safety concerns at first as well but we've both been more than pleased with how it's gone. I'd be happy to connect you with her to get the safety perspective or show you our setup. You can take a look at pictures of our basement unit on my profile and shoot me a call or text if you want to come see it.

[Lawrence Potts]

Quote from @Elaine Raymond:

I’m a first time investor looking to househack with a small multifamily (duplex, triplex), but they are scarce and competitive in my area. I’m not interested in renting out a room in my primary residence for safety and privacy. Should I go smaller (e.g., house with a mother-in-law suite) or bigger (e.g., small apartment complex)? Frankly I haven’t considered going bigger until now because I’m intimidated by the idea. 

As mentioned earlier, anything over 4 units are considered commercial and require different lending products that need a large down payment.

You can see if there are any homes like you mentioned with a mother-in-law suite or some form of an ADU, anything separate with an exterior entrance. Or if there’s a way to create that in a floor plan.

If you can find a multifamily, I’d go that route simply because you can scale faster utilizing the rental income. I’d consider giving @thatADU guy a follow and see what he’s doing in his market. His market is also very limited in multifamily but he’s making it work! Hope that helps!

[Lucia Rushton]

@Elaine Raymond where do you live or where are you looking ?

[Daniel Apke]

Commercial can be tough, i'd stay 2-4 units for your first one. Put more emphasis on finding a duplex or quad you should be able to in the ATL market. If you're really struggling finding a good deal, consider directly reaching out to owners via text or postcard. That is a good way to get the conversation started.