What is a Fourplex?
A fourplex is a residential property containing four separate dwelling units. It represents the maximum number of units that qualifies for residential financing (1-4 units). Properties with 5+ units require commercial loans with different (generally stricter) requirements. This makes the fourplex the sweet spot for maximizing rental income while maintaining access to the best loan products available.
The fourplex house-hack is considered one of the most powerful wealth-building entry strategies in real estate. Purchase a fourplex with FHA financing (3.5% down), live in one unit, and rent three units. The rental income from three units typically covers the entire mortgage payment, allowing you to live essentially rent-free while building equity in a property worth significantly more than you paid.
Fourplex income example
A fourplex at $450,000 with four units renting at $1,100 each. Total gross rent: $4,400/month. Mortgage: $2,700/month. Expenses (taxes, insurance, maintenance, vacancy, management): $1,200/month. Net cash flow with all four rented: $500/month. While living in one unit: net cash flow is negative $600 ($1,100 less income), but you save the $1,500/month you would have paid renting an apartment elsewhere. Net benefit: $900/month.
The fourplex pipeline
Many investors repeat the fourplex strategy annually: buy a fourplex, live in one unit for 12 months (FHA requirement), move to a new fourplex, and rent the freed-up unit. After 3-4 years, you own 12-16 units with minimal personal capital invested, generating substantial passive income. This strategy works because residential financing (low down payment, best rates) is available for each purchase as long as it is your primary residence at time of purchase.