The definition of a multifamily property is simple, a building that has more than one housing unit. But, are multifamily properties commercial or residential?
The answer is, it depends. Generally, properties with more than five units are considered multifamily commercial real estate (MFCR), while anything with less than five is classified as residential.
With so many real estate types, it is important to have the correct classification for a property you intend to invest in. Not only can the type of property impact what type of financing you need, but can also impact long-term investment strategies.
There are many types of MFCR properties, but these are some of the most common.
Additional types include student housing, assisted living facilities, and mixed retail/residential space.
MCFR properties are also broken down by asset class type for investment purposes. The asset class is based on the overall quality and condition of the property.
However, the rental rates are not the only thing to consider when looking at a MCFR investment. For instance, while class A properties might bring in higher rental prices, they usually also cost more for initial investment and upkeep/maintenance.
This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.