What Is a 4plex and Should You Invest in One?
Gain a comprehensive understanding of what a 4plex property entails, from its physical makeup to its financial and operational considerations for investors.
A 4plex, also known as a quadplex, is a specific type of residential property that contains exactly four distinct living units within a single structure. This multi-unit dwelling is designed to house four separate households, each operating independently. This configuration distinguishes it from single-family homes, duplexes with two units, or triplexes with three.
Core Characteristics
A 4plex includes four self-contained residential units. Each of these units typically features its own kitchen, bathroom, living areas, and separate entrance, allowing for independent occupancy. While the units are distinct, they share common structural elements such as a single roof, foundation, and exterior walls, contributing to the property’s unified appearance.
Many 4plex properties are designed with individual utility meters for each unit, enabling tenants to manage their own electricity, gas, and sometimes water consumption. However, some configurations might include shared utility services for common areas or even some individual units, with costs often integrated into the rent or allocated differently. The layout can vary, with units arranged side-by-side, stacked vertically, or a combination of both within the same building envelope. This design often allows the structure to blend into residential neighborhoods, sometimes resembling a large single-family home from the exterior.
Legal and Classification Aspects
The four-unit distinction of a 4plex holds importance in real estate. Zoning ordinances typically categorize these properties as multi-family residential, allowing for higher density than single-family zones. These classifications guide how the land can be developed and the types of structures permitted within a given area.
The number of units also impacts financing options. Properties with one to four residential units are generally classified as residential for lending purposes, which provides access to conventional residential mortgages. This contrasts with properties containing five or more units, which are typically considered commercial properties by lenders. Commercial properties usually require different types of loans, often with varying terms, interest rates, and down payment requirements compared to residential mortgages. This distinction allows a 4plex owner to utilize more favorable residential financing products.
Common Ownership Models
A 4plex supports two primary ownership models, leveraging its multi-unit nature for income generation. One common approach is the owner-occupied model, often termed “house hacking.” In this scenario, the owner resides in one unit while renting out the remaining three. This strategy allows rental income from the other units to offset a significant portion of the owner’s mortgage and property expenses.
Alternatively, a 4plex can be acquired purely as an investment property, with all four units rented to tenants. This model focuses on generating rental income from the entire building. Both ownership models reflect the property’s core characteristic as a source of consistent rental revenue, making it an attractive option for those seeking to generate income from real estate. The multi-unit design provides multiple income streams within a single property.