# Duplex/Multi-Family Investment Calculator Rent roll to cash flow on a small multi-family, with cap rate, DSCR, GRM, and an owner-occupied mode. --- - **Canonical URL:** https://dothecalculation.com/calculators/duplex-multifamily-investment-calculator - **Category:** Real Estate & Property - **Publisher:** Do The Calculation (https://dothecalculation.com) - **Cost:** Free, no account or sign-up required - **Privacy:** Runs entirely in the browser; inputs are never sent to a server - **Methodology:** https://dothecalculation.com/methodology --- ## Underwrite a Duplex, Triplex, or Fourplex Rent roll to net operating income to cash flow, with cap rate, DSCR, gross rent multiplier and price per unit alongside — and an owner-occupied mode for house hacking. - Per-unit rents, vacancy, and a percentage-of-income expense load - Cap rate, DSCR, GRM, price per unit, and the 1% screen together - Owner-occupied mode turns cash flow into an effective housing cost ## Quick Answer — How Do You Analyse a Duplex or Fourplex? Build the income statement first, then apply the debt. The order matters, because every metric that follows comes from a different line of it. • **Gross Potential Rent** = Rented Units × Monthly Rent × 12 • **Effective Gross Income** = Gross Potential Rent − Vacancy + Other Income • **Net Operating Income** = Effective Gross Income − Operating Expenses *(mortgage excluded)* • **Annual Cash Flow** = Net Operating Income − Annual Debt Service **Worked example:** a **$425,000** duplex renting at **$1,750** a unit with **$75** a month of other income, **6%** vacancy and a **35%** expense load. Gross potential rent is **$42,000**, effective gross income is **$40,380**, operating expenses are **$14,133**, and net operating income is **$26,247**. At **25%** down (**$106,250**) the **$318,750** loan at **6.75%** over 30 years costs **$2,067.41** a month, or **$24,808.88** a year. Annual cash flow is **$1,438.12** — **$119.84** a month. With **$11,000** of closing costs and **$6,000** of rehab, total cash invested is **$123,250**, giving a **cash-on-cash return of 1.17%**, a **cap rate of 6.18%**, and a **DSCR of 1.06**. That is a thin deal, and the metrics say so in three different ways at once. A 6.18% cap rate is respectable; a 1.06 DSCR is barely above breaking even on the debt; and a 0.82% rent-to-price ratio fails the 1% screen. **The property is fine and the financing is tight** — a distinction cap rate alone would never show. ## How to Use This Calculator: A $425,000 Duplex Enter the price, the unit count, and the average rent per unit. Small multi-family properties usually have similar units, so an average works; where one unit is materially larger, run the property twice at the extremes to bracket the answer. Vacancy and the expense load are the two inputs that decide whether the analysis is honest. **Six percent** vacancy is about 22 days a year per unit, which is realistic for a stable market with reasonable tenancies. The **35% expense load** covers taxes, insurance, maintenance, capital reserves, management and turnover as a share of effective gross income — for small multi-family, **35% to 45%** is the usual range, and anything below 30% almost always means something has been left out. Build the figure properly with the [net operating income calculator](/calculators/net-operating-income-calculator) rather than guessing, and remember the mortgage is **not** an operating expense. Closing costs and rehab belong in cash invested, not in expenses. Money spent before the property stabilises is capital; leaving it out inflates the cash-on-cash return, here by roughly 0.2 points on a $123,250 basis. Then read the four ratios together. **Cap rate (6.18%)** measures the property with no financing. **Cash-on-cash (1.17%)** measures your position after financing. **DSCR (1.06)** is what a lender underwrites to — most commercial lenders want 1.20 to 1.25 on multi-family, so this deal is below the usual floor even though it technically cash flows. And **gross rent multiplier (10.12)** and **price per unit ($212,500)** are the quick comparison metrics against other listings; the [gross rent multiplier calculator](/calculators/gross-rent-multiplier-calculator) covers that screen in more depth. ## A Second Example: A Fourplex That Cap Rate Flatters Take a **$760,000** fourplex at **$1,425** a unit with **$150** a month of other income, **7%** vacancy and a **38%** expense load, financed at **25%** down and **7.25%**. Gross potential rent is **$68,400**, effective gross income is **$65,412**, operating expenses are **$24,856.56**, and net operating income is **$40,555.44**. The cap rate is **5.34%** and the gross rent multiplier is **11.11** — unexciting but not obviously a problem, and price per unit at **$190,000** is lower than the duplex. Then the debt lands. The **$570,000** loan costs **$3,888.40** a month, **$46,660.86** a year — more than the entire net operating income. Annual cash flow is **−$6,105.42**, a loss of **$508.78** every month, and the cash-on-cash return is **−2.76%** on **$221,000** invested. **DSCR is 0.87**: the property generates only 87 cents of operating income for every dollar of mortgage payment. A DSCR below 1.0 is not a marginal deal, it is a declined loan application. Most lenders will not fund it, and the ones that would are pricing that risk into a rate that makes it worse. The remedies are arithmetic rather than optimistic: more cash down, a lower price, higher rents, or a lower expense load — and the last of those is the one that most often turns out to be wishful thinking. Compare the leveraged view against the [cash-on-cash return calculator](/calculators/cash-on-cash-return-calculator), which works the same chain for a single-family rental. ## House Hacking: Living in One Unit Set owner-occupied units above zero and the analysis changes purpose. You are no longer measuring a return; you are measuring **what housing costs you** after the other units contribute. Negative cash flow is expected and is not a failure — it is your rent. On the same **$425,000** duplex, living in one unit and renting the other at **$1,750**, financed at **3.5%** down (owner-occupied financing that an investor could not access), the numbers are: gross potential rent **$21,000**, net operating income **$12,831**, and a **$410,125** loan costing **$2,660.06** a month. Annual cash flow is **−$19,089.76**, which means an **effective monthly housing cost of $1,590.81**. That figure is the whole point. Against renting a comparable unit at $1,750, the owner is housed for **$159 a month less** while building equity, capturing appreciation on the full $425,000, and taking depreciation on the rented half. Against a single-family purchase at the same price with no rental income, the saving is the entire $1,750 of rent. Two caveats belong with that. The 3.5% down payment produces a much larger loan and a DSCR of **0.40** — perfectly fine while you live there, and an immediate problem if you move out and the property has to stand alone. And the effective housing cost here excludes the value of your own time as a landlord living next to your tenant, which is a real cost even though it never appears in a spreadsheet. The [house hacking affordability calculator](/calculators/house-hacking-affordability-calculator) approaches the same question from the qualifying side, where lenders count a portion of the projected rent as income. ## Limitations This calculator uses a single average rent across units and a percentage-of-income expense load. Real small multi-family properties have uneven units, uneven leases, and expenses that behave more like fixed costs than percentages — property taxes and insurance do not fall when a unit sits empty. Where you have actual figures, enter them as fixed annual expenses instead of relying on the percentage. It is a stabilised, single-year, pre-tax model. It does not include appreciation, the principal repaid each month (which is your money moving into equity rather than a loss), depreciation and its tax shelter, rent growth, expense inflation, or the eventual sale — all of which can dominate total return over a realistic hold. Nor does it model a value-add repositioning where rents rise substantially after rehab; for that, model the stabilised year separately. Financing is assumed to be a single fixed-rate amortising loan. Small multi-family is often financed commercially with shorter terms, balloons, and adjustable rates, in which case the DSCR at the reset date matters more than the payment today. Owner-occupied financing terms are only available while you actually occupy the property. This is a general educational tool, not investment, tax, or lending advice — verify rents and expenses against real data and consult a qualified professional before committing capital. ## Related Calculators Build the expense side properly with the [Net Operating Income Calculator](/calculators/net-operating-income-calculator) before trusting any ratio on this page, and check the income side with the [Vacancy Rate & Loss Calculator](/calculators/vacancy-rate-loss-calculator). For the single-family version of the same chain, use the [Cash-on-Cash Return Calculator](/calculators/cash-on-cash-return-calculator); for the quick listing screen, the [Gross Rent Multiplier Calculator](/calculators/gross-rent-multiplier-calculator). If you plan to live in one unit, the [House Hacking Affordability Calculator](/calculators/house-hacking-affordability-calculator) covers how lenders treat the projected rent, and the [Rental Property ROI Calculator](/calculators/rental-property-roi-calculator) adds appreciation and amortisation for a total-return view. ## Frequently asked questions ### How do you analyse a duplex investment? Build the income statement, then apply the debt. Gross potential rent less vacancy plus other income gives effective gross income; less operating expenses gives net operating income; less debt service gives cash flow. On a $425,000 duplex at $1,750 a unit, NOI is $26,247 and cash flow after a $318,750 loan at 6.75% is $1,438.12 a year. ### What expense ratio should I use for a small multi-family property? Thirty-five to forty-five percent of effective gross income is the usual range for small multi-family, covering taxes, insurance, maintenance, capital reserves, management and turnover. Anything below 30% almost always means something has been omitted — most often reserves or management. ### What DSCR do lenders require on multi-family? Commonly 1.20 to 1.25. The duplex example reaches only 1.06 and the fourplex example 0.87, which is below 1.0 — the property generates less operating income than its mortgage payment, which is a declined loan rather than a marginal one. ### What is the 1% rule for multi-family? A screen, not a standard: monthly gross rent of at least 1% of the purchase price. The duplex example is at 0.82% and the fourplex at 0.75%, both failing it. It is a quick filter for whether a deal is worth full underwriting, and it fails almost everything in high-price markets. ### How does house hacking change the analysis? It changes what you are measuring. With one unit owner-occupied, negative cash flow is your rent rather than a loss. On the $425,000 duplex at 3.5% down, cash flow of −$19,089.76 a year means an effective housing cost of $1,590.81 a month — $159 less than renting a comparable unit, while building equity on the whole property. ### Can I buy a duplex with 3.5% down? With owner-occupied financing, yes — FHA permits low down payments on two-to-four unit properties you live in, and this is the core advantage of house hacking. Those terms are unavailable to an investor buying the same building, who would typically need 20% to 25%. ### Is cap rate or cash-on-cash return more important? They answer different questions. Cap rate measures the property with no financing and is the right tool for comparing buildings; cash-on-cash measures your position after the mortgage and is the right tool for comparing this deal against other uses of the money. The duplex example shows a healthy 6.18% cap rate alongside a 1.17% cash-on-cash return — the gap is entirely the debt. ### Should closing costs and rehab count as cash invested? Yes. Any money spent before the property stabilises is capital, not an expense. Omitting $17,000 of closing costs and rehab from a $123,250 basis would overstate the cash-on-cash return, which is the most common way small multi-family returns get quietly inflated. ## Related concepts - **Debt Service Coverage Ratio** — Net operating income divided by annual debt service. Lenders on multi-family typically want 1.20 to 1.25; below 1.0 the property cannot cover its own mortgage. - **Price Per Unit** — Purchase price divided by unit count. The fastest like-for-like comparison between small multi-family listings in the same submarket. - **Effective Housing Cost** — In owner-occupied mode, the monthly shortfall after tenant rent. What living there actually costs, against renting the same space. ## Related guides - [Airbnb ROI Guide: How to Calculate Cap Rate, Cash Flow, and Cash-on-Cash Return](https://dothecalculation.com/blog/property/airbnb-roi-guide) — Underwrite short-term rentals like a professional. Learn how to calculate cap rate, monthly net cash flow, and occupancy-driven returns using actual vacation rental math. - [How to Use Do The Calculation Calculators: A Practical Step-by-Step Guide](https://dothecalculation.com/blog/site-guides/how-to-use-calculators) — Learn the fastest reliable workflow for using Do The Calculation calculators, reading results, checking formulas, and using save, print, share, and export actions correctly. ## Related calculators - [Rental Property ROI Calculator](https://dothecalculation.com/calculators/rental-property-roi-calculator) — Calculate rental property ROI with projected monthly cash flow, cap rate, cash-on-cash return, and net operating income for investment properties. - [Airbnb ROI Calculator](https://dothecalculation.com/calculators/airbnb-roi-calculator) — Calculate Airbnb rental ROI, including projected monthly cash flow, cap rate, and cash-on-cash return, to evaluate short-term rental profitability. - [Cash-on-Cash Return Calculator](https://dothecalculation.com/calculators/cash-on-cash-return-calculator) — Annual pre-tax cash flow over cash invested, shown next to cap rate and debt service coverage ratio. - [Property Cash Flow Calculator (Monthly)](https://dothecalculation.com/calculators/property-cash-flow-calculator) — Calculate monthly rental property cash flow and DSCR from rent, vacancy, the full operating expense stack, and the mortgage payment. - [BRRRR ROI Calculator](https://dothecalculation.com/calculators/brrrr-calculator) — Evaluate Buy, Rehab, Rent, Refinance, Repeat investment deals by calculating cash left in the deal, equity created, and overall return on investment. - [Commercial Cap Rate & Valuation Calculator](https://dothecalculation.com/calculators/cap-rate-market-calculator) — Calculate commercial property capitalization rates and estimate implied property valuation from net operating income for investment analysis. --- _This calculator uses a single average rent across units and a percentage-of-income expense load; real properties have uneven units and expenses that behave like fixed costs, so enter known figures as fixed annual expenses where you have them. It is a stabilised, single-year, pre-tax model excluding appreciation, principal repayment, depreciation, rent growth, expense inflation, and the eventual sale. Financing is assumed to be a single fixed-rate amortising loan, where small multi-family is often financed commercially with balloons and resets, and owner-occupied terms apply only while you occupy the property. This is a general educational tool, not investment, tax, or lending advice._ --- _Source: [Do The Calculation](https://dothecalculation.com/calculators/duplex-multifamily-investment-calculator). Quote freely with attribution and a link to this page._