🔓 💸 🚀 🏢 The 4-Unit “Cheat Code” That Launched My Multifamily Journey

My first foray into real estate investing was in 2013, and it felt like I had stumbled onto a cheat code that most people never learn exists.

I bought a fourplex, a 4 unit property, for $510,000.

A $510,000 income producing multifamily property, and my total out of pocket cash to close was under $8,000.

How is that even possible?

Because in real estate, the number of units changes everything. Four units and under is treated like “residential.” Five units and up is treated like “commercial.” That single unit difference quietly decides how hard the game is to enter.

🔓 The invisible line that changes the entire playing field: 4 units vs 5+ units

A 1 to 4 unit property lives in the world of consumer home financing. That means you can use tools designed for everyday homebuyers, even though you are buying a small apartment building.

Once you hit 5+ units, you cross into commercial real estate. Different rules, different lenders, different underwriting, and a much higher barrier to entry.

On the 1 to 4 unit side:

• You can qualify based heavily on your personal income and credit

• Down payments can be dramatically lower

• Loan terms are typically longer and more forgiving

• The process is familiar, like buying a primary residence

On the 5+ unit side:

• Lenders underwrite the property’s income more than you

• Down payments are usually larger

• Terms are often shorter, with stricter requirements

• They want to see liquidity, net worth, and often prior multifamily ownership or operational experience

This is why a fourplex can be the perfect gateway drug into multifamily. It is the last stop before the commercial world begins.

🏘️ A real world example of how the “cheat code” works

Because I used an FHA loan, I only needed 3.5% down.

On $510,000, 3.5% is $17,850.

Most people stop the math there and assume you have to bring $17,850 plus closing costs. That is what keeps them on the sidelines. But this is where God’s grace shows up.

Somehow, my cash burden collapsed.

Here is what happened:

• I negotiated seller credits to offset closing costs

• The lender waived origination fees

• My buyer’s agent kicked in an additional $5,000 credit from their compensation

So even though the down payment requirement was $17,850 on paper, the combination of credits and fee reductions shrank what I needed to actually bring to closing.

My total out of pocket: less than $8,000.

I was blessed to work with a seller, agent, and lender who were all keen to make the deal happen. But honestly, even if I had to pay the full $17,850, it would still have been an amazing opportunity. It wasn’t luck; it was about knowing the rules and not getting caught up in the typical “American Dream” narrative.

Back then, I wasn’t concerned that my first home wasn’t a 3-bedroom, 2-bathroom house with a white picket fence in the suburbs. My focus was entirely on stepping into the real estate world. I had a plan.

📉 And the financing made the deal even more unfair (in a good way)

My interest rate was 3.98%.

On a 30-year loan, my principal and interest payment came out to about $2,344/month.

And here is where the affordability cheat code really shows itself.

The other three townhome units rented for an average of $1,200 each, so the property generated:

• $1,200 x 3 = $3,600/month in rent (from the units I didn’t live in)

Meanwhile, my fixed housing costs looked like this:

• Property taxes: $6,200/year = $517/month

• Insurance: $2,925/year = $244/month

So my monthly “carry” (mortgage + taxes + insurance) was roughly:

• $2,344 (P&I) + $517 (taxes) + $244 (insurance) = $3,104/month

Now do the simple math:

• $3,600/month rent (from the other 3 units)

• minus $3,104/month (mortgage + taxes + insurance)

• equals about $496/month in monthly cash flow

So I was living in one unit while the other three not only covered the mortgage, but also left about $496/month on top of it (before maintenance, vacancies, and reserves).

That is what affordability looks like when you see opportunities.

That is not “buying a home.”

That is buying a small apartment building using homeowner financing, and letting tenants subsidize your entire cost of living.

💸 Why this changes affordability for the everyday investor

Most people think multifamily requires a massive amount of capital. And if you start at 10 units, 20 units, or 50 units, they are right.

But fourplexes are the bridge between “I can only afford a house” and “I own an apartment building.”

If you can house hack it, even better: you live in one unit, rent the others, and the property helps pay for itself. You are not just buying real estate. You are turning your primary residence into a wealth building machine.

It is affordability and leverage working together, not just affordability alone.

🏦 Financing is different. Risk is perceived differently. Experience requirements are different.

This is another part most people miss.

When you are buying 5+ units, lenders and even the seller’s broker often want to know:

• Have you owned and operated multifamily before?

• Do you have property management infrastructure?

• Do you have liquidity and reserves, or are you going to waste our time and get cold feet at the closing table?

• Do you have a track record?

On a fourplex with residential financing, the hurdle is simply:

• Can you qualify like a homeowner?

That is a massive barrier reduction. It is why someone can leap from “no portfolio” to “multifamily owner” without being a billionaire or having an institutional resume.

🚀 The result: 18 months later, I exited with real profit

Eighteen months later, I sold the property and walked away with $237,000 in pure profit, which I rolled into a 1031 exchange.

That moment was the proof. The fourplex was not just a small deal. It was a launchpad.

🔁 The second cheat code: the 1031 exchange

I rolled the gains into a larger multifamily property using a 1031 exchange.

That meant I deferred capital gains taxes and reinvested more of my profits instead of handing them to the IRS.

So the story is not just:
“I made money.”

It is:
“I used the rules to keep my money working.”

That is what creates compounding.

🧠 The insight: the first deal is not about being big. It is about being strategic.

The biggest mistake new investors make is thinking they have to start where they want to end.

But the people who build real portfolios often start with the best entry point, not the biggest opportunity.

A fourplex is one of the best entry points in real estate:

• It is multifamily income with residential lending

• It is low down payment financing with FHA

• It is less friction, less gatekeeping, fewer experience hurdles

• It gives you a track record

• It can create real capital for your next step

That is why I call it a cheat code.

Because it is the closest thing to buying an apartment building using the rules designed for homebuyers.

And once you see that line between four and five units, you never look at “multifamily” the same way again.

What I would do differently today (with the benefit of hindsight) 🧠

If I could rewind back to 2013 and run that same fourplex play again, I would still do it in a heartbeat. But I would be far more intentional about turning a great “entry” deal into an even bigger wealth accelerator 🚀. Here is what I would do differently.

1) Lock in a long-term plan before I ever close
Today, I would walk into closing with a clear 18 to 36 month blueprint: target rents , reserve targets, refinance or sale triggers, and an exit plan. The deal should not just be acquired; it should be engineered.

2) Underwrite all-in cash flow, not just the payment 🧾📊
The mortgage, taxes, and insurance math is powerful 💪. But I would also budget for:

• Maintenance and CapEx reserves

• Vacancy and credit loss

• Turnover and leasing costs

• Utilities / lawn / snow / common-area expenses (if any)

Not because the deal becomes less attractive, but because confidence comes from knowing the real numbers before the surprises show up 🎯.

3) Put systems in place immediately, even on a small property ⚙️
I would treat a fourplex like a mini 100-unit operation from day one.

• Written tenant screening criteria

• Standard lease templates + rent collection process

• Maintenance request tracking 🔧

• Vendor list and pricing

• Simple monthly reporting

It is not about complexity. It is about consistency.

4) Raise rents and clean up operations faster 📈🧹
If a unit is below market, you are sitting on hidden value 💎. Today, I would move faster on:

• Cutting unnecessary expenses

• Pushing renewals toward market the right way

• Setting a simple resident experience standard 🙂

• Improving curb appeal and basic finishes that drive rent 🌳✨

Small improvements compound quickly in multifamily 📈➡️📈.

5) Be more strategic about tax planning from day one 🧠🧾
I used the 1031 exchange, which was a major win. But today, I would bring in a tax pro early and plan around:

• Depreciation strategy

• Clean recordkeeping for improvements

• Timing the sale or refinance

• The smoothest path to redeploy capital

The goal is not just to make money. It is to keep more of it working.

6) Keep the asset longer, or refinance instead of selling (if the math worked)
Selling 18 months later and making $237,000 was a great outcome. But today I would also consider: hold longer ⏳, build more equity, and refinance to pull cash out tax efficiently while keeping the cash-flowing machine running ⚙️📈.

7) Document everything to build credibility for bigger deals 📸📝
If you want to cross into 5+ units, your track record becomes currency. I would keep a clean “deal journal” from day one:

• Before-and-after photos

• Rent roll improvements

• Expense reductions

• Unit turns and upgrades

• Cash flow and equity growth

That makes raising capital and getting lenders comfortable much easier later.

Bottom line:
In 2013, I used the cheat code to get into the game. If I did it again today, I would use the same cheat code, but I would run it with a more deliberate playbook to increase cash flow, reduce surprises, build credibility, and set up the next acquisition sooner 🚀.

 🙏🏾 Thanks for reading!

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Stay blessed and Do Something!

— Dami Fadipe