Investing in fourplexes can be a good investment when the rents from four units comfortably cover the mortgage, property taxes, insurance, and operating expenses, leaving reliable cash flow and room for maintenance. The simplest way to evaluate a fourplex investment property is: estimate market rents for all rental units, subtract realistic vacancy and expenses to get net operating income, then see if what’s left after debt service produces the monthly cash flow you want. Fourplexes can be especially powerful for an owner occupied buyer using an FHA loan (or VA loans where eligible) because you can live in one unit and have multiple tenants pay much of the payment—while still owning one building with four separate living units and strong long-term income potential if it’s properly managed.

For more details, keep reading.

What a Fourplex Is (And Why Four Units Can Beat Single Family Homes)

A fourplex is one property with four units—typically four separate living units inside one building. Each unit is a self-contained space with its own kitchen, bath, and living area. Depending on the layout, each unit may have an own entrance or share a common building entrance (like a small apartment-style setup).

From a real estate investing standpoint, fourplexes sit in a sweet spot:

• Larger than duplex properties

• Smaller than big apartment buildings

• Often financed like residential property (up to four units), which can create more approachable financing options than true commercial deals

Why many investors like fourplex properties

Compared with single family homes or single family houses, a fourplex can provide:

• more units under one roof (literally one roof)

• higher total rental income from the same parcel

• more resilience if a tenant leaves (you lose one rent stream, not all of it)

That last point is huge. With single family properties, vacancy is binary—either you collect rent or you don’t. With a fourplex, vacancy risk is spread across four rental units, which can smooth your income.

“Multifamily properties” without feeling like a huge landlord

Fourplexes are part of multifamily properties, but they’re often still manageable for a first-time real estate investor. You can keep the asset small enough to understand, yet big enough to produce meaningful income and build a real estate portfolio.

Fourplex Investing Math That Matters: Rental Income, NOI, and Cash Flow

A fourplex can look amazing on paper, but the numbers have to be grounded in the local market. If you want the deal to perform, you need three core calculations: gross rent, NOI, and cash flow.

Step 1: Estimate gross rental income (based on the local market)

Start by researching realistic rent for each unit, not optimistic rent. In most markets, your real estate agent can help pull rent comps, and you can also validate with local listings and property management data.

Gross rental income = Rent (Unit 1) + Rent (Unit 2) + Rent (Unit 3) + Rent (Unit 4)

If you’re investing in a fourplex as owner occupied, you still count the rent you could receive for your unit (even if you live there) when you’re assessing the property’s income potential. It keeps your investment analysis honest.

Step 2: Subtract vacancy and operating expenses to get net operating income

Net operating income (NOI) is what’s left after normal operating costs, before the mortgage.

NOI = Gross rental income
− Vacancy allowance (based on local vacancy rates)
− Operating expenses

Operating expenses commonly include:

• property taxes (watch for reassessment after purchase—your taxes may rise)

• insurance

• water/sewer/trash (if not billed back)

• common area electric/gas (if applicable)

• repairs and maintenance costs

• turnover costs (paint, cleaning, minor fixes—especially with higher tenant turnover in some areas)

• admin/legal/accounting

• licensing/inspection fees where required

• property management (even if you self-manage, price it in to compare deals fairly)

Tip: if the building has separate meters, you may be able to have tenants pay their own utilities, which can improve NOI. If utilities are shared, your expenses rise and your underwriting must reflect it.

Step 3: Calculate cash flow (after the mortgage)

Cash flow is the money you keep each month after paying the mortgage (principal + interest) and setting aside reserves.

Cash flow = NOI
− debt service (mortgage payment)
− reserves for capital items (roof, boilers, pavement, etc.)

This is where fourplexes can shine: if rents are strong and expenses are controlled, a fourplex can produce steady cash flow and help you scale your real estate investment faster than a single family rental.

Don’t ignore property value and taxes

A fourplex’s property value is often driven by income (and market cap rates), so improving NOI can increase value over time. But higher value can also mean higher taxes after the sale—so your “lower property taxes” assumption must be verified, not hoped for.

If you’re planning to move to Western New York, or if you’re already a local resident, understanding how cash flow works in a fourplex—especially how rental income and expenses roll up into net operating income—is just one part of your life in Western New York. For more helpful tips on real estate investing, be sure to check out our latest blog on Carol Klein WNY Homes, where we cover practical guidance for buyers and investors on local market considerations, financing, and getting started.

Fourplex Investment Strategy: Owner Occupied vs Pure Investment Properties

Your strategy determines your financing, your tenant profile, and how hands-on you need to be.

Owner occupied: live in one unit, rent the other three

This is the classic house-hack path: you buy a fourplex, live in one unit, and rent the other three separate living units. If the rents are strong, your tenants pay a big portion of the mortgage, which can supercharge your ability to save and acquire more investment properties.

Benefits of owner occupied fourplex investing:

• easier entry point for a newer investor

• potential for low down payment options

• on-site oversight that can reduce management headaches early on

Tradeoffs:

• you’re living next to your tenants

• boundaries matter (privacy, noise, parking)

• you still have real management responsibilities

Non-owner occupied: the asset has to stand on its own

If you’re buying a fourplex as a pure rental (not living there), it’s typically underwritten more strictly by the mortgage company, and you may need a larger down payment. But it can be a clean way to expand a real estate portfolio without living in the building.

Fourplex vs single family homes: what changes operationally

Even though a fourplex is “one building,” it behaves differently than single family homes:

• more tenant communication (more leases, more maintenance requests)

• more turnover events (statistically more likely someone moves)

• more systems to monitor (multiple kitchens, baths, appliances)

If it’s properly managed, that extra complexity can be worth it because you’re collecting more rent streams and spreading vacancy risk.

Financing Options for Investing in Fourplexes (FHA, VA, Conventional, Commercial Loan)

Fourplex financing is one of the biggest reasons investors focus on four-unit buildings: many lenders treat 1–4 unit properties as residential—even though they’re clearly multifamily.

FHA loan for a fourplex investment property (owner occupied)

An FHA loan can be a powerful tool for investors interested in getting started, because it’s designed for owner-occupants and can allow a lower down payment than many conventional options.

Typical FHA fourplex considerations (varies by lender and your profile):

• you generally must live in the property (owner occupied)

• the property must meet FHA condition standards

• rental income may be considered by underwriting (documentation and rules vary)

This is often the most accessible path for someone investing in a fourplex for the first time—if the building is in good enough shape and the numbers work.

VA loans (where eligible)

For eligible borrowers, VA loans can also apply to small multifamily in certain scenarios, often with favorable terms. Like FHA, it’s commonly tied to owner occupancy requirements.

Conventional financing through a mortgage company

Conventional loans can work for both owner-occupied and non-owner-occupied 2–4 unit properties, but requirements can be tighter on:

• down payment

• reserves

• credit and debt-to-income

• property condition

This is where comparing multiple lenders helps. Two mortgage companies can view the same fourplex very differently.

Commercial loan (when it applies)

A commercial loan typically comes into play when:

• the property has 5+ units (not a fourplex), or

• your deal structure, borrower profile, or property use pushes it into commercial underwriting

Some investors still use commercial-style financing for fourplexes in certain contexts, but most fourplex buyers focus on residential loan products if available, because terms can be simpler and sometimes cheaper.

What to prepare before applying

Regardless of loan type, be ready with:

• rent comps and a realistic income schedule

• operating expense estimates

• a basic plan for property management (self-manage vs property management company)

• a clear explanation of your overall investment strategy

Lenders like clarity. It reduces friction and makes approvals faster.