Multi-family property

A multi-family property is any residential building in which more than one family lives*.  It doesn’t matter how many units it’s separated into. For example, it can be a complex of 3,000 garden apartments spread out over a hundred acres. At the other extreme, though, it could be a single, detached house in which the owner rents out one floor.

Who owns it doesn’t matter, according to Moody’s Analytics. It could be a condo, a co-op, a property management company or a sole proprietor. The owner could occupy one unit or not.

Types of multi-family property

A duplex is a two-floor house in which a different family lives on either floor. They share a common front door and foyer. Still, each unit has a separate entrance off the foyer. In similar fashion, a triplex or a quadplex is a house with three or four separate units, respectively.

Townhouses share exterior walls. Bought and sold separately, each has its own private entrance. A row of townhouses often extends the length of a city block.

Semi-detached homes contain only two units. Aside from that, they are much the same as townhouses.

Rowhouses

Multi-family property - rowhomes

 

Semi-detached homes

Multi-family property - semi-detached

 

An apartment building is a single structure with at least five separate units. If it also hosts a business, then it’s a mixed-use building. An apartment community is a collection of apartment buildings sharing grounds and amenities. These amenities could include  parking, swimming pool, gardens or a playground.

Confusion with “commercial property”

Residential property and commercial property are the two general categories of real estate. Not all multi-family property is residential. The difference is whether the property’s main purpose is a return on investment. If it is, then it’s commercial property. That includes apartment buildings and mixed-use buildings.

The real estate industry considers any property with five or more housing units to be commercial. Any property with four or fewer housing units — and no commercial units — is by convention residential. These include duplexes, triplexes, quadplexes, townhouses and semi-detached hom. Apartment buildings and complexes, though, are commercial.

*Sharestates’ functional definition of multi-family property veers from the widely accepted one described here. When Sharestates lists an investment as a “multi-family property,” it has at least five units.


← Back to Glossary