Multifamily Homes 101: A Strategy Guide for SF Buyers and Investors

Scott Conway, San Francisco Realtor® 

For many San Francisco buyers, the dream of owning a classic single-family home can feel frustratingly out of reach. With limited inventory and median prices for detached homes hovering north of $1.7M in many neighborhoods, it’s no wonder even well-qualified buyers are looking for alternatives.

But if you’re feeling stuck, there’s another route to consider—one that can help you build equity, reduce your monthly housing costs, and offer long-term upside: multifamily properties.

We’re talking about 2- to 4-unit buildings that offer both a place to live and a built-in source of rental income. In a city where creativity is often the key to real estate success, this is one path that more and more savvy buyers are exploring.

Why a Multifamily Might Make More Sense Than a Single-Family Home

1. Rental Income Offsets Your Mortgage
Renting out additional units can significantly reduce your out-of-pocket expenses. In some cases, the income might cover your entire mortgage, especially when you're house hacking—living in one unit while renting the others. Owner-occupied buyers may even qualify for better financing options, including lower down payments and interest rates.

2. Entry Into Real Estate Investing
You don’t need to be a full-time landlord to benefit from a multifamily. Buying one lets you ease into the world of real estate investing while building wealth over time. If you ever move out, you’ve got a ready-made rental property with proven income potential.

3. Flexibility for Family, Friends, and Future Plans
Multifamilies can work great for multigenerational living, adult children who want privacy, or friends who want to co-own without cohabitating. You get built-in flexibility—whether you use extra units as guest suites, work-from-home offices, or long-term rentals.

4. Long-Term Value and Appreciation
Despite rent control and tenant protections, San Francisco multifamily properties in desirable areas have historically appreciated well. They also tend to weather market dips better due to the steady demand for rental housing in the city.

WHAT DOES THE DATA TELL US?

Here’s a comparative analysis of Single-Family Homes (SFH) vs. Multifamily (Duplex/Triplex) properties in Noe Valley and Glen Park (SF District 5), based on sales from January 5, 2024 to July 2025:

Key Metrics Overview Glen Park & Noe Valley

Takeaway for Buyers & Investors

If you're priced out of the single-family market or looking to make a smart long-term investment, multifamily homes in Noe Valley and Glen Park offer more space, lower price per foot, and income-producing potential—especially attractive in today’s high-cost market.

What to Avoid: Red Flags and Risky Property Types

Not all multifamily homes are created equal. Before you get too excited about a “deal,” here are some key issues to watch out for:

1. Tenant-Occupied Properties with Long-Term, Under-Market Rents

Many older multifamily properties in San Francisco are tenant-occupied with renters who’ve lived there for decades. These tenants often pay well below market rate due to rent control laws, which limit how much you can raise the rent annually (often just a fraction of inflation). If you’re relying on rental income to make the property pencil out, this can seriously limit your cash flow.

Tip: Always ask for a Rent Roll and review the actual income versus market potential. Some properties look great on paper until you realize the tenants are paying 1990s prices.

2. Properties with Protected or Vulnerable Tenants

Certain tenants—such as seniors (60+), people with disabilities, or those who’ve lived in a unit for more than 10 years—qualify for additional protections under San Francisco’s Just Cause Eviction Ordinance. These protections can make it extremely difficult (or impossible) to move a tenant out, even if you intend to occupy the unit yourself.

Caution: Never assume you can “move in later.” Always consult a real estate attorney or your agent to verify tenant status and rights.

 3. Deferred Maintenance and Unpermitted Work

Many multifamily homes—especially in legacy neighborhoods—may have unpermitted additions, aging systems (knob-and-tube wiring, old plumbing), or deferred maintenance that hasn’t been addressed in years. This can mean major capital improvements post-purchase, often without the benefit of increased rent to cover it.

Red Flag: If the property has had the same owner for decades and there’s no record of recent upgrades, budget accordingly for big-ticket repairs.

4. Tenancy-In-Common (TIC) Pitfalls

Some multifamily properties are structured as TICs (Tenants-in-Common), especially in smaller 2-unit buildings. While TICs can offer an entry point at a lower price, they often come with complex financing, shared mortgages, and restrictions on converting to condos. If you’re buying a TIC, make sure you understand the implications and read the TIC agreement carefully.

5. Overly Optimistic Pro Formas

Sellers will often present pro formas that reflect projected rents instead of actual rents. If the units are tenant-occupied and rent-controlled, those projections may be legally impossible to achieve. Always base your numbers on actual leases and allowable increases.

Bottom Line

Buying a multifamily property in San Francisco is a different ballgame from buying a traditional home, but the rewards can be substantial. With the right guidance, it can be a smart, flexible way to enter the market, generate income, and build long-term wealth in one of the most resilient cities in the country.

It’s not a one-size-fits-all strategy, and there are definitely pitfalls to avoid. But for buyers willing to think creatively and do a little extra due diligence, it could be the best move you make this year.

Curious about what’s available, or wondering how a multifamily strategy might work for you? Let’s connect. Scott can help you break down the numbers, spot the red flags, and explore opportunities that align with your goals, whether you're buying your first property or your next one.