Greg Chow
A multifamily home is a building with more than one unit where people can live, each with their own separate kitchens, living rooms, electric bills, and so forth. Also called a multidwelling unit, or MDU, they are typically found in densely populated areas such as cities where space is at a premium. Multifamily homes can be rented, be owned, or serve as an investment property where landlords can collect rent from tenants.
There are millions of multifamily dwellings nationwide, compared with 90 million single-family homes. Although living in close quarters with others may not be ideal in terms of privacy or noise, people in multifamily homes generally pay less than those in single-family homes and are taxed with less home maintenance, because a management company may be responsible for repairing the building’s exterior or mowing the lawn.
Types of multifamily homes
Multifamily homes come in all shapes and sizes. Here are some of the more common designs:
Duplex: Two homes in one freestanding structure
Townhouse: Any number of homes attached at the sides with separate entrances
Condominiums (condo): A private residence in a building or community with multiple unitsApartment building: Could be up to hundreds of homes in one structure. Unlike the above dwellings, apartment building units are often rented by tenants rather than owned.
How to invest in a multifamily home
Buying a multifamily home to rent out (or where you live in one unit and rent out the rest) is a smart financial strategy—today more than ever. The reason: Homeownership is decreasing, recently dipping below the 66.6% historical average.