The pros and cons of buying a multi-family dwelling

By Cait Etherington | From Get To Know Wednesday, April 12, 2023

2007 Fifth Avenue, a three-family home for sale (Sotheby's International Realty)

While most multi-family dwellings in New York City fall into neatly defined categories (e.g., co-op or condo, walk-up or elevator building), any property that contains two or more units is a multi-family dwelling. Buying a multiple-family dwelling (e.g., a duplex, triplex, or house with a legal basement apartment) can be an incredibly smart financial decision. Still, before you go on the market for a multi-family dwelling, it is also important to understand all the pros, cons, and responsibilities of purchasing and managing a home with one or more rental units.

The pros of a multi-family building

The primary reason to purchase a multi-family dwelling is that under the right conditions, buyers can immediately put their property to work on their behalf. If the property is home to one market-rent unit or more, the rental income will offset and may even cover one’s monthly mortgage payments. Given the high cost of housing in New York City, generating revenue from one’s residential property is generally a win-win situation.

The Cons of Buying a Multi-Family Dwelling

If you’re purchasing a multi-family dwelling, it must be noted that everything from financing to taxes will be more complicated.

Financing: Multi-family dwellings are often more costly than single-family dwellings, so the first obstacle will be coming up with a sufficient down payment. In addition, due to the potential risk (i.e., the fact that you’ll be relying on income generated from one or more rental units to pay down the mortgage), lenders may ask for a higher down payment (e.g., 25 to 30 percent). Finally, expect most lenders to pay additional attention to your debt-to-income ratio. After all, whether or not the property’s rental units are occupied by paying tenants, the mortgage will be your responsibility. Lenders will want assurance that you have the means to cover the entire mortgage, even when the property is not generating revenue (e.g., in between tenants).
Inspections: In New York City, many co-op and condo buyers skip inspections. If you're buying a house, however, you'll definitely want to arrange for a thorough inspection, and this is particularly important when purchasing a multi-family dwelling. Among other things, you’ll want to ensure that the units you intend to rent out are legal and in good condition. Any problems with the rental units could negatively impact the property’s eligibility for insurance or the property’s appraisal value, which could, in turn, impact your eligibility for financing. Problems that aren’t visible on the surface (e.g., structural damage or hidden mold) could also pose a liability down the line.
Taxes: Owning a multi-family dwelling carries significant financial benefits, but with the additional income, also expect your taxes to get a lot more complex. The IRS’s rules on rental properties are detailed in Publication 527, a 27-page document that outlines all the ins and outs of claiming rental income. Fortunately, there are also many tax advantages to owning a multi-family dwelling. In addition to being able to write off a variety of purchases and services (e.g., kitchen appliances and home repairs), rental properties are also subject to depreciation, which essentially enables you to deduct the cost of buying and improving a rental property and to spread out the deduction over an extended period of time and related write-offs.

Responsibilities as the owner of a multi-family dwelling

Like it or not, if you’re buying a multi-family dwelling, you’ll need to be ready to become a landlord. Being a landlord is more than a title. It is a position that comes with a long list of responsibilities, and full details may be found in the ABCs of Housing. Chief among them are the following:

General Maintenance: As a landlord, you must ensure that all common areas are clear, safe, well-lit, and maintained in full compliance with the Housing Maintenance Code (HMC) and Multiple Dwelling Law (MDL).
Snow Removal: This past winter was one of New York’s warmest, but we will more than likely see more snow and ice in coming years. In that case, it is the owner’s responsibility to clear snow and ice from the front of their building and surrounding sidewalks in a safe and timely manner (full details on snow season may be found here).
Heat: Heating is also your responsibility. Indeed, you must provide your tenants with heat between October 1st and May 31st. When the outside temperature dips below 55 degrees between the hours of 6:00 am and 10:00 pm, you must ensure that your units are at least 68 degrees Fahrenheit. Between 10:00 pm and 6:00 am, whatever the outside temperature, your rental units must be at least 62 degrees.
Water: Tenants must have access to hot and cold water 24 hours a day, 365 days a year. Hot water must be kept at a minimum constant temperature of 120 degrees Fahrenheit.
Leaks, mold, and pests: Even if you’re the Mayor of New York City, you are responsible for immediately addressing all leaks, mold, or pests in rental units under their watch. If not, you may be subject to fines.
Safety: Landlords, not tenants, are on the hook to ensure that each unit has a working smoke detector and carbon monoxide detector and has a proper fire exit (e.g., a well-maintained fire escape).
Child Safety: As a landlord, you must comply with local laws concerning lead-based paint and window guards.
Paperwork: Finally, as a landlord, expect additional paperwork; this will include filing annual paperwork with the city regarding your compliance with lead-based paint regulations. If you have a residential property with three or more units (or you are renting out one or two units in a home in which you don’t also reside), you must also register the units with the NYC Department of Housing Preservation & Development (HPD). If the building is rent stabilized, you’ll also be expected to register with NYS Homes and Community Renewal (HCR).

210 West 122nd Street, #Building
$4,900,000

Harlem | Townhouse | 6+ Bedrooms, 6+ Baths | 4,750 ft²

210 West 122nd Street, #Building (Compass)

From the Listing: Nestled in the heart of Harlem, this stunning townhouse is a true gem that has been beautifully restored and updated for modern living. Originally built in 1880, this one-of-a-kind property has been meticulously preserved to showcase its Victorian-era grandeur, with original details like mahogany millwork, stained glass transoms, and inlaid floors adding a touch of old-world charm. Luxurious amenities include jacuzzis, deep soaking tubs, dry sauna. A recently updated Chef's kitchen, complete with high-end appliances and custom-made walnut cabinetry, is the perfect place to whip up a gourmet meal while enjoying views of the tranquil landscaped terrace and country garden. It offers significant income expansion potential for prospective buyers who wish to continue its legacy or can be transformed into an elegant private residence. See floor plan and full details here.

246 Monroe Street, #Building
$1,870,000

Bedford-Stuyvesant | Townhouse | 6+ Bedrooms, 4 Baths | 2,800 ft²

246 Monroe Street, #Building (Massada Home Sales Inc)

From the Listing: Beautiful four-story brownstone, legal two family in the cusp of Clinton Hill/Bedford Stuyvesant, situated in a picture perfect tree-lined block. This large house offer the owner a beautiful and large duplex, also a large income-producing rental. Ideally located between both major subway stops in the area - A train Nostrand stop and also G train Nostrand stop, five minutes each direction! See floor plan and full details here.

706 Hancock Street, #NA
$2,150,000

Bedford-Stuyvesant | Townhouse | 4 Bedrooms, 3.5 Baths | 2,461 ft²

706 Hancock Street, #NA (Douglas Elliman Real Estate)

From the Listing: 706 Hancock is a charming two-family brownstone located on a tree lined block in Stuyvesant Heights. This cheerful turn-key home offers excellent opportunity for end users and investment. The upper duplex contains three bedrooms, each containing generous closet space, and two and a half bathrooms. The lower duplex is a spacious one bedroom, one-and-a-half-bathroom unit with a sizable cellar and ample storage space. Both apartments also offer private garden access. Additional features of this home include wide plank oak flooring, central AC, new mechanicals, two brand new water heaters and the ability for a strong rental unit income to offset a mortgage. See floor plan and full details here.

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310 Decatur Street, #NA
$2,150,000

Bedford-Stuyvesant | Townhouse | 4 Bedrooms, 3.5 Baths

310 Decatur Street, #NA (Corcoran Group)

From the Listing: Welcome home to 310 Decatur Street, a tastefully renovated 2-fam brownstone in the heart Stuyvesant Heights, a highly coveted and historic subsection of Bed-Stuy. This magnificent, turnkey townhouse consists of an owner's triplex over a garden rental (4 floors + basement). The home was meticulously renovated with love by the current homeowner (not a flipper), resulting in a beautiful blend of original character with modern amenities. Located on highly sought after Decatur Street between Stuyvesant Ave & Malcolm X Blvd, this home provides convenient access to shops, restaurants & transportation. See floor plan and full details here.

912 Saint Nicholas Avenue, #NA
$2,425,000

Washington Heights | Townhouse | 6+ Bedrooms, 4.5 Baths | 4,000 ft²

912 Saint Nicholas Avenue, #NA (Corcoran Group)

From the Listing: Located in historic Sugar Hill, this newly renovated townhouse has two triplex units, both beautifully and thoughtfully designed. The top unit has an open kitchen/dining plan on the living room floor, plus a powder room and washer/dryer. Three bedrooms and two full baths on the bedroom floor, and on the floor above, a rooftop studio which opens out to a roof deck with open views. The bottom apartment has two beds, an office/den and two full baths. The open living plan floor offers all the features of the other, plus the added charm of private outdoor space. See floor plan and full details here.

699 Halsey Street, #NA
$2,225,000

Bedford-Stuyvesant | Townhouse | 5 Bedrooms, 4 Baths | 2,736 ft²

699 Halsey Street, #NA (Corcoran Group)

From the Listing: Beautifully renovated two-family Bed Stuy brownstone on a picturesque tree-lined block. The upper unit on the Parlor level opens up to a charming vestibule and has 3 bedrooms and 3 bathrooms on the top two floors and exclusive access to the cellar. The Garden level houses a 2-bedroom / 1-bath unit that can earn high rental income or can easily be combined with the upper floors to create a single-family home or separate work space. See floor plan and full details here.

341 East 116th Street, #House
$2,495,000 (-9.3%)

East Harlem | Townhouse | 6+ Bedrooms, 6+ Baths | 4,625 ft²

341 East 116th Street, #House (Serhant LLC)

From the Listing: A sun-drenched two-family brownstone nestled in the heart of East Harlem, 341 East 116th Street offers several potential uses that include a live-work space, an income producing investment property, or a huge single-family home. The 5-bedroom, 4.5-bathroom upper triplex begins with a luminous living room with a trio of windows and a charming brick accent wall. The living room leads into an open plan living and dining area with soaring 12 foot ceilings and access to the backyard. The garden-level rental unit features an open plan layout, a side-by-side washer/dryer, and a bright bedroom with a massive walk-in closet and an en-suite bathroom. See floor plan and full details here.

2007 Fifth Avenue, #House
$3,299,000

East Harlem | Townhouse | 5 Bedrooms, 4 Baths | 3,816 ft²

2007 Fifth Avenue, #House (Daniel Gale Sotheby's International Realty)

From the Listing: This three-family brick townhouse stands proud at 18 feet wide and 53 feet deep and is adjacent to Marcus Garvey Park. The interior is grand, featuring exposed brick walls, soaring ceilings, original details such as ornate woodwork, moldings, carved fireplaces and mirrors that have been restored to its original splendor. Offering an owner's triplex, you enter into the Garden level and are greeted with exposed brick and an open and inviting floor plan that maximizes the home's social aspect. Featuring hard wood floors throughout the entire living space, the two apartments are private, and each offer a large bedroom, updated full bath, open concept kitchenette with a large living room. See floor plan and full details here.

263 West 139th Street, #House
$3,300,000

Harlem | Townhouse | 4 Bedrooms, 4 Baths | 4,500 ft²

263 West 139th Street, #House (COLDWELL BANKER RELIABLE REAL ESTATE NYC)

From the Listing: 263 West 139th Street is the only 19-foot-wide townhouse with an open east view one of the two Strivers Row landmarked blocks. Its primary bedroom is uniquely located on the parlor floor's north side and is wrapped with six windows. Also on the parlor floor is the windowed, eight-person-table dining room, stainless steel kitchen with two sinks and a south facing living room celebrated by two Juliet balcony doors amongst its four windows. A private one-bedroom garden duplex rental brings supporting income to this extraordinary style of townhouse living. See floor plan and full details here.

7 2nd Street, #
$3,900,000

Carroll Gardens | Townhouse | 4 Bedrooms, 4 Baths

7 2nd Street, # (Brownstone Real Estate LLC)

From the Listing: 7 2nd Street is a beautiful, well-maintained, four-family brownstone townhouse in a supremely prime location in Carroll Gardens. The building retains historic elements, including mantles and fine woodwork, while boasting strong bones and good mechanics, hallmarks of diligent owners and consistent upkeep. The property offers nearly endless options for conversion, should the buyer wish to change the layout. The high ceilings and brick arches in the basement invite finishing with a preservationist eye, and the private rear garden has the substantial size needed to create lush and functional areas. See floor plan and full details here.

43 West 94th Street, #NA
$4,800,000

Central Park West | Townhouse | 6+ Bedrooms, 5 Baths | 4,100 ft²

43 West 94th Street, #NA (Brown Harris Stevens Residential Sales LLC)

From the Listing: Vacant two-family, in need of renovation, middle of one of the Upper West Side's most historic and beautiful Park blocks. There are 4,100 square feet on 4 floors plus an 1,100-square-foot cellar. Fabulous brick and brownstone faade with original stoop and iron work, carved gargoyle. Rear garden is large and gets great light. House has Certificate of Occupancy for triplex plus top-floor rental. Bring your architect, contractor and design your own home! See floor plan and full details here.

88 Joralemon Street, #House
$5,300,000

Brooklyn Heights | Townhouse | 6+ Bedrooms, 5 Baths

88 Joralemon Street, #House (Leslie J Garfield & Co Inc)

From the Listing: Set on a beautiful, tree-lined block in Brooklyn Heights, 88 Joralemon Street is a 21'-wide, four-family townhouse with an owner's duplex apartment. There are also three apartments above, each in excellent condition. Period details from the 19th century include exposed brick, beautiful millwork, and preserved hardwood floors and fireplace mantles throughout. The beautiful curb appeal, excellent frontage, and prime location make Number 88 ideal for live-with-income or single-family conversion. See floor plan and full details here.

246 East 48th Street, #Building
$5,495,000 (-12.7%)

Turtle Bay/United Nations | Townhouse | 6+ Bedrooms, 6+ Baths | 4,473 ft²

246 East 48th Street, #Building (Elegran LLC)

From the Listing: This Turtle Bay gem is a four-unit, four-story walk-up building containing three one-bedroom units and one two-bedroom flexible unit. Situated just one building away from the corner of a very quiet block This property affords any inhabitant the ability to be steps away from the local restaurants, cafes, grocery stores, and transportation while providing a sun-filled tranquil oasis. See floor plan and full details here.

109 West 77th Street, #House
$6,500,000

Broadway Corridor | Townhouse | 6+ Bedrooms, 5 Baths | 5,760 ft²

109 West 77th Street, #House (Leslie J Garfield & Co Inc)

From the Listing: 109 West 77th Street is a classic Renaissance Revival and Romanesque Revival style townhouse designed by the architect Henry L. Harris in 1891. The property consists of four free-market units, including a renovated owner's duplex and three renovated floor-through units above, each with their own washer/dryer. The owner's unit features four bedrooms, soaring ceilings, a serene private garden, charming original details, a newly renovated kitchen, and access to the basement, which is currently storage but could be finished for an additional floor of living space. See floor plan and full details here.

291 West 12th Street, #NA
$7,500,000

West Village | Townhouse | 5 Bedrooms, 4 Baths | 3,500 ft²

291 West 12th Street, #NA (Corcoran Group)

From the Listing: This Federal-style brick townhouse offers grand proportions standing at an impressive 21' wide and four stories tall. The stately property features beautifully preserved details throughout, a rare triple exposure on the fourth floor and a quintessential, charming West Village garden in the back. The home is abundant with architectural details and warmth while presenting a buyer with striking spaces and flexibility of use. Currently configured as an upper triplex over a duplex, this offers a buyer the opportunity to live-in while collecting strong income from the lower rental. As a single-family home, the first floor could comfortably accommodate an in-law suite or additional bedrooms for the house. See floor plan and full details here.

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Contributing Writer Cait Etherington Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.

Read Full Bio | Contact Cait Etherington

This is your member's center

In this article:

The pros of a multi-family building

The Cons of Buying a Multi-Family Dwelling

Responsibilities as the owner of a multi-family dwelling

210 West 122nd Street, #Building
$4,900,000

246 Monroe Street, #Building
$1,870,000

706 Hancock Street, #NA
$2,150,000

Select which properties are of interest to you:

310 Decatur Street, #NA
$2,150,000

912 Saint Nicholas Avenue, #NA
$2,425,000

699 Halsey Street, #NA
$2,225,000

341 East 116th Street, #House
$2,495,000 (-9.3%)

2007 Fifth Avenue, #House
$3,299,000

263 West 139th Street, #House
$3,300,000

7 2nd Street, #
$3,900,000

43 West 94th Street, #NA
$4,800,000

88 Joralemon Street, #House
$5,300,000

246 East 48th Street, #Building
$5,495,000 (-12.7%)

109 West 77th Street, #House
$6,500,000

291 West 12th Street, #NA
$7,500,000

This is your member's center

In this article:

The pros of a multi-family building

The Cons of Buying a Multi-Family Dwelling

Responsibilities as the owner of a multi-family dwelling

Select which properties are of interest to you:

Select which properties are of interest to you:

Listings in this article

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