Charles Passy
Published April 7, 2011

House prices are still tanking in many parts of the country, mortgage rates are inching up, and job growth is subpar. So what are some homebuyers doing? They’re buying even more home—as in two-, three- and four-family homes—and playing a risky, but potentially lucrative, game of real estate investor and live-in landlord at the same time.

While the National Association of Realtors doesn’t have a detailed breakdown of sales of multifamily homes, there’s telling local data. In parts of New York, multi­family sales were up 26 percent in the third quarter of 2010, compared with the year-earlier period. And in Chicago’s popular Lakeview and North Center neighborhoods, the growth was even more dramatic—a 77 percent multifamily uptick midway through 2010. Individual real estate agents are likewise seeing a spike. Michael Reiser of Coldwell Banker Gundaker in St. Louis says his multifamily business has doubled in the past year. “I am working with more buyers than I ever have before,” the veteran agent says.

What’s behind the new interest in these homes? Real estate agents and buyers say if you look more closely at the negatives, you start to see them as positives. True, prices may not have bottomed out in every locale, but real estate professionals think they can’t be far from that low. (Altos Research, which surveys the national real estate market,  predicts a drop in overall residential prices for 2011, followed by slow improvement from 2012 to 2014.) And while we might not see a 4.25 percent, 30-year mortgage (the 2010 low, according to Freddie Mac) again any time soon, rates are still not far from historic lows, for now.

Read more: It Pays to Own a Multi-Family Home –