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Posted by
Klodian Hoxha

What does a property have to have to constitute as "Multifamily"?

Working with an investor who has some doubts about if the property that he is interested in is "legally a multifamily". This is because they tenants are sharing the cost utilities. Do we have any expects who can educate us on this?

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What does a property have to have to constitute as "Multifamily"?

By Klodian Hoxha   
Posted on Nov 30, 2017 in Topic: Realtor Only
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Working with an investor who has some doubts about if the property that he is interested in is "legally a multifamily". This is because they tenants are sharing the cost utilities. Do we have any expects who can educate us on this?
Status: Open
Viewed: 124
Asked by: REALTORS®
Posted: 2 weeks ago
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Silver
Michael Jobin
about 2 weeks ago

I also work with investors and In most cases it comes down to how the electric service is rendered. True Multi-Family will have distinct electric meters/service for each unit.
Another way to tell is how it is taxed.

Michael Jobin, SRES
C&K Properties



about 2 weeks ago
Gold
Ryan Kohn
about 2 weeks ago
It would be constituted a more than one Living unit. Typically with separate electricity meters, water etc. Most importantly design, Each unit should have a kitchen, bath and areas to sleep. I won't say bedroom since efficiency style apartments would be disqualified. Basically, you need at least 2 separate units within the same structure that are designed to be lived in completely. 1 house with 20 rooms nor 1 lot with 4 separate de-tached houses would be considered multifamily. More than four you move away from the standard 1-4 Family Contract.
A couple resources attached, thanks for asking the question it made me think about it.


Source:


https://en.wikipedia.org/wiki/Multi-family_residential\n\nhttps://www.zillow.com/advice-thread/What-does-multi-family-mean/441027/

about 2 weeks ago
Silver
Christopher Dayanand
about 2 weeks ago
To me, 4 or more units will be a multifamily. A single family residence with multiple families sharing is not a multifamily. Each unit needs to stand alone. Utilities can be shared evenly among all units but that has drastically changed since now apartment complexes know how to split utilities per unit.

Chris
Coldwell Bankers
www.ChrisRealEstatePro.com
832.859.8698


about 2 weeks ago
Bronze
Ryan Modi
about 2 weeks ago
Multifamily or single family? Real estate investors have been debating these two strategies for a very long time. Our company has invested in single families, small multifamily (1-4 units), mid-sized commercial multifamily (5-40 units), and large apartment complexes (40+ units).

It looks like your scenario is about small multifamily (1-4 units) where the utilities meter is only one but the utilities bills are split among tenants. This can be a good strategy for financing for the investors where they can still get conventional residential loans and also FHA financing with as little as 5% down. This can be considered single family property rented out to multiple tenants.

If the financing will be based on the property rental income, it is considered multi-family commercial property. This investing strategy gives the investor ability to raise the value of the property by increasing income or decreasing expenses.

Hope this helps.

Ryan Modi, MBA
Pattern Realty
Ph: (281) 236-4040


about 2 weeks ago
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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