SFR: Single Family Residential
What is a single family residential property?
What qualifies as single family residential?
Single family residential (SFR) is any residential real estate property with 1-4 units. A single house, duplex, triplex, or fourplex are all considered single family residential real estate and each have unique advantages and disadvantages. The main difference between these different types of SFR are the number of dedicated entrances and the number of families the property is designed to hold.
A duplex is one building with two living units that is designed for two separate families. By extension, a triplex is a property with three separate living units and a fourplex has four separate living units. As long as the property does not have five or more units, it likely qualifies as single family residential and therefore it is possible to obtain a residential real estate loan for these property types. Properties with five or more units are considered multi-family and require a commercial real estate loan.
Purchasing single family residential properties
A SFR property can be a solid real estate investment. Purchasing a multi-unit SFR property is similar to purchasing a single house in that you want to assess the building's condition and location. In addition, you’ll want to evaluate the building’s potential to produce income.
Evaluate the property financials, like gross potential rent, vacancy rate, expenses, net operating income, and anything else that impacts the bottom line.
Determine if the property is in a desirable area. Location will be a determining factor for occupancy and rental rates. What are duplexes, triplexes, or fourplexes asking for rent in the surrounding market?
Before purchasing a residential investment property, it's worth learning about property management. As a landlord, you'll be responsible for screening tenants, negotiating leases, property maintenance, and rent collection amongst other responsibilities.
Financing single family residential properties
Properties with more than four units are considered commercial properties and will not qualify for residential financing. For this reason you can get a residential mortgage to purchase a duplex, triplex, or fourplex. A second option may be to look into an owner-occupied loan in which there is a condition that you live on the property. A third option is to inquire if the party you are purchasing from would consider seller-financing. A further consideration is investigating how the rental income from the property may help you qualify for the loan.
Finding Los Angeles duplex, triplex, and fourplexes
Searching for multi-unit SFR properties can be tricky. Sometimes they are listed as residential real estate and other times they are listed as commercial real estate. Champagne is experienced in sourcing these properties and can identify owners who might be interested in selling their property even though it is not currently listed.
Champagne helps buyers and sellers in neighborhoods across Los Angeles find the ideal properties for their needs. Our experience in residential real estate and commercial real estate helps bridge the knowledge gaps in purchasing duplex, triplex, and fourplex properties.
Want to learn more? Give us a call at (805) 900-3000 or email us at team@champagneinc.com