Home Page

Subscribe to Email Updates

Latest Blog Post

What is a Multi-Family Home? Simply Explained for Beginners

Michael Nolen of Coldwell Banker Realty
by Michael Nolen of Coldwell Banker Realty on February 1, 2021 at 2:00 PM

A multi-family home is a property, also known as real property, with a single structure that contains more than one residence (or dwelling).

In this post, I'll simply explain the basic differences between residential and commercial multi family real estate.


iStock - Colorful Multi Family Houses


Residential multi-family real estate

Residential multi-family property can range from a duplex, which consists of two dwellings, to a small apartment building with 4 or less units or dwellings.

Residential multi-family real estate qualifies for conventional financing, FHA financing, or VA financing. A conventional investment loan is required if at least one of the four dwellings is your primary residence.


Commercial multi-family real estate

Buildings with more than 4 units are considered commercial properties, but still considered multi-family homes or apartments.

Commercial multi-family real estate requires commercial financing, which is often available from private lending or local banks financing commercial real estate.

Multi-family properties can have multiple buildings on one lot. If there’s more than 4 units on one lot, it’s considered commercial real estate. For example: If a lot has 2 buildings, and each building has 3 separate units, it's considered commercial since there's a total of 6 units.

Sometimes separate buildings could be plotted on separate lots. This could give you an opportunity to buy each building and it's designated lot as separate real estate transactions. This could be considered as separate residential purchases if each lot has less than 4 units.


Multi-family real estate investing

Passive income can be generated from Multi Family investments. Securing rental tenants such as

  • Yearly rental tenants that pay rent monthly

  • Executive, temporary, or transitional housing rentals

  • Vacation rentals and short term rental investments

Seasonal resort or vacation rental markets have a lot of opportunities for Passive income investing with multi-family homes by securing short-term vacation rental tenants or guests.


Leave a comment

Michael Nolen of Coldwell Banker Realty
Michael brings a diverse background of mortgage, loan servicing and housing experience. Michael offers his clients a variety of helpful resources, guides and services that helps make buying and selling coastal real estate in the Ocean City, Ocean Pines, and Coastal Delaware markets. Michael has over 11 years industry experience and invests and manages vacation rental properties in the Ocean City, MD area through Nolen Invest and Nolen Vacation Rentals.
Written by Author

Related posts

Why Multi-Family Investing is Ideal for Ocean City MD Vacation Rentals

Investing in multi-family real estate in Ocean City, MD has many valuable benefits; from control of your cost of ownership, to...

Winterize Vs. Off-Season Renting Your Ocean City, MD Vacation Home: What’s Better?

No matter if you’re buying a vacation home in Ocean City, MD for vacation rental investment or a second home, your off-season...