What is a fourplex? At its core, it’s a single building divided into four separate living units, offering the convenience of shared ownership with the earning potential of multiple rentals.
Whether you’re curious about investing in one or just want to understand how it differs from other housing options, this guide breaks down everything you need to know in simple terms.
What is a Fourplex?
A fourplex is one building divided into four separate homes. Each unit gives tenants their own space while still being part of the same property. Here are the key features:
- Private spaces: Each unit has its own entrance, kitchen, bathroom, and living area.
- Shared amenities: Many fourplexes include features like:
- Parking spaces
- Laundry facilities
- Outdoor areas or yards
- Flexible layouts: Units may be single-story or spread across multiple floors.
- Independent living: Tenants live separately but share the overall property structure.
In short, a fourplex offers a mix of privacy, convenience, and efficiency in one building.
How Does a Fourplex Work as an Investment Property?
A fourplex works as an investment by allowing landlords to earn rental income from four separate units within one property. Unlike a single-family rental, it offers multiple income streams, which can make your cash flow more stable and predictable.
Here’s how it typically works:
- Rental income: You collect rent from up to four tenants, which helps cover your mortgage, property taxes, insurance, and ongoing maintenance costs.
- Owner-occupancy: Many investors choose to live in one unit while renting out the other three, reducing their personal housing expenses while building equity.
- Financing benefits: Because a fourplex is still considered a residential property (1–4 units), you can often qualify for residential loans with lower interest rates compared to commercial financing.
- Scalable growth: A fourplex allows you to manage multiple rental units under one roof, making it more efficient than maintaining several single-family homes spread across different locations.
Example: How Rental Income Works
Imagine you purchase a fourplex for $600,000 with a 20% down payment ($120,000) and finance the rest with a mortgage.
- Monthly mortgage, taxes, and insurance: $3,500 (approx.)
- Average rent per unit: $1,200
- Total rental income from 4 units: $4,800
In this scenario, your rental income exceeds your monthly expenses by about $1,300, giving you positive cash flow while also building equity in the property.
Example: Fourplex Investment Cash Flow Breakdown
Advantages and Disadvantages of Investing in a Fourplex Property
Investing in a fourplex property, also known as quadplexes, can be a smart move, but it’s not without its challenges. To help you see the bigger picture, here are the main advantages and disadvantages explained in detail.
Advantages
Multiple income streams
Owning a quadriplexes gives you four units to rent out, which means more reliable cash flow compared to a single-family rental. This setup helps spread your income sources and reduces dependency on just one tenant.
Lower vacancy risk
With four separate units, the risk of losing all your rental income at once is low. Even if one unit is vacant, the rent from the other three can still help cover mortgage payments and operating costs.
Financing benefits
A fourplex is classified as a residential property, so you can often qualify for residential financing. These loans typically have lower interest rates and easier approval requirements than commercial loans.
Owner-occupancy option
You can choose to live in one unit while renting out the other three. This strategy allows you to offset your living expenses, lower your mortgage burden, and build equity faster.
Disadvantages
Higher maintenance needs
Managing a fourplex means more repairs, upkeep, and tenant requests. The costs and time required for maintenance are higher compared to owning a single-family rental.
Tenant management
Handling four sets of tenants requires strong communication and management skills. From collecting rent to addressing concerns, it can become a demanding responsibility if not handled well.
Upfront costs
Purchasing a fourplex usually requires a larger down payment and closing costs. While the long-term returns can be strong, the initial financial commitment is higher than other smaller properties.
Shared spaces
Shared amenities like parking, laundry, or outdoor areas can sometimes create disputes among tenants. Proper management and clear rules are necessary to avoid conflicts and keep everyone satisfied.
Fourplex vs Single-Family Homes Rental Income
Example: Fourplex vs. Single-Family Rental Income
What Expenses Should Landlords Expect with a Fourplex?
Owning a fourplex can deliver steady rental income, but it also comes with ongoing expenses that landlords must plan for. These costs not only affect your monthly cash flow but also protect the long-term value of your investment. Here are the main expenses to expect:
Mortgage Payments
The monthly mortgage is usually the largest expense. Even if rental income offsets much of the cost, you’ll need to budget carefully to ensure consistent payments.
Property Taxes
Fourplexes are assessed at higher values than single-family homes, which often results in higher property taxes. These are unavoidable fixed costs that impact your net returns.
Insurance
Landlord insurance is essential for multi-unit properties. It typically protects against property damage, landlord liability claims, and sometimes loss of rental income. If you’re wondering what does landlord insurance cover, it usually includes:
- Landlord insurance for damage from fire, storms, or vandalism
- Liability if a tenant or guest is injured on the property
- Potential rental income loss if units become unlivable after a covered event
Maintenance and Repairs
With four units, expect more frequent maintenance requests—appliance replacements, plumbing issues, and HVAC servicing are common. Regular upkeep ensures tenant satisfaction and protects your investment.
Utilities (If Covered by Landlord)
Landlords often cover shared utilities such as water, trash, or landscaping. Clearly defining what tenants pay vs. what you cover helps avoid budget surprises.
Property Management Fees
Hiring a property manager can cost 8–12% of rental income. While it adds expense, it can save time and reduce stress if you don’t want to handle tenant relations directly.
Capital Improvements
Big-ticket rental property renovations that can affect landlord insurance like roof replacements, parking lot repairs, or exterior upgrades should be expected over time. Setting aside reserves for these ensures financial stability when they arise.
By planning for these expenses and understanding what does a landlord insurance covers, you can manage risks, protect your property, and keep your fourplex investment profitable.
What Should You Look for Before Buying a Fourplex?
Buying a fourplex can be a profitable step into real estate investing, but knowing what to look for before making a purchase is crucial. The right property can deliver steady cash flow, while the wrong one can quickly turn into a money drain. Here are the key factors to consider:
Location and Neighborhood
Choose a fourplex in an area with strong rental demand, good schools, employment opportunities, and access to public transit. A desirable location helps reduce vacancy rates and attract quality tenants.
Property Condition
Inspect the building carefully for structural issues, plumbing, roofing, and electrical systems. Older properties may come with hidden repair costs that can eat into your returns.
Rental Income Potential
Research average rent prices in the area to see if the units can generate enough income to cover expenses. Positive cash flow is the foundation of a solid investment.
Expenses and Reserves
Factor in costs like taxes, insurance, maintenance, and possible upgrades. Setting aside reserves for major repairs will protect your cash flow when big expenses arise.
Tenant Market
Understand the type of tenants the property is likely to attract—families, students, or young professionals. Matching the property to local demand ensures consistent occupancy.
Financing Options
Since a fourplex still qualifies as a residential property, you may access lower interest rates compared to commercial loans. Exploring multiple financing options can maximize affordability.
Carefully evaluating these elements before buying a fourplex ensures your investment is both sustainable and profitable.
Fourplex Investor Checklist – Is It Right for You?
Ask yourself these questions before deciding:
- Do I want steady monthly cash flow and long-term equity growth?
- Am I comfortable managing multiple tenants or hiring a property manager?
- Can I afford the higher upfront costs compared to a single-family rental?
- Does my market have strong rental demand for multi-unit properties?
- Am I looking for an investment I can scale without jumping to commercial properties?
- Would I consider living in one unit to offset costs while renting the others?
- Do I have reserves set aside for maintenance, vacancies, and capital improvements?
If you answered “yes” to most of these, a fourplex could be a smart fit for your investment strategy.
Protect Your Fourplex Investment with the Right Insurance
Your fourplex is more than just a property—it’s a long-term investment that deserves strong protection. Without proper coverage, unexpected events like property damage, liability claims, or loss of rental income can eat into your profits. That’s where Obie comes in. We specialize in landlord insurance tailored for multifamily properties, making it simple to safeguard your rental income and keep your investment secure. Get the peace of mind you need—get a quote with Obie today.
FAQs
What are the main expenses of owning a fourplex?
Key expenses for a fourplex include the mortgage, property taxes, landlord insurance, ongoing maintenance and repairs, utilities (if covered by the landlord), property management fees, and reserves for large capital improvements like a new roof.
What should I look for before buying a fourplex?
Before buying, evaluate the property's location and rental demand, its physical condition (roof, plumbing, electrical), its rental income potential, and the local tenant market. Also, consider your financing options and ensure you have adequate cash reserves for expenses.
Is a fourplex a good investment for me?
A fourplex may be a good investment if you want steady cash flow, are prepared to manage multiple tenants (or hire a manager), can afford the higher upfront costs, and have savings for vacancies and major repairs. It's an effective way to scale without buying commercial property.
What does landlord insurance cover for a fourplex?
Landlord insurance for a fourplex typically covers property damage from events like fire or storms, liability protection if someone is injured on the property, and may also cover the loss of rental income if the units become uninhabitable due to a covered event.
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