Rentana Knowledge Base

If you’ve ever looked into buying or investing in real estate, you’ve probably come across the term multifamily and wondered where townhomes fit in. They look a bit like apartments, sometimes share walls like duplexes, and yet are often sold as individual homes.

So, are townhomes actually considered multifamily properties, or do they fall under the single-family category? Let’s clear up the confusion and break down how townhomes are classified in the real estate world, and why that classification matters more than you might think.

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What Is a Townhome?

A townhome, also called a townhouse, is a type of home that’s built in a row of similar units that share one or more walls with neighboring houses. Each townhome usually has multiple floors, its own private entrance, and sometimes a small yard, patio, or garage.

Unlike an apartment, which is part of a larger building owned by one landlord, a townhome is individually owned, meaning you own both the interior and the portion of land it sits on. And unlike a condo, where the homeowner typically only owns the inside of the unit, townhome owners often have responsibility for the exterior walls, roof, and small outdoor spaces.

In short, a townhome combines the privacy of a single-family house with the connected layout of shared-wall living. It’s a popular choice for people who want a balance between community living and independent homeownership.

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Are Townhomes Considered Multifamily Properties?

The short answer is, not always. Townhomes can be classified as either single-family or multifamily properties depending on how they are owned and managed. The key factor is ownership structure, not just how the buildings look.

When each townhome is owned by an individual homeowner, it is considered a single-family dwelling. Each unit sits on its own parcel of land, and the owner is responsible for maintaining the interior, exterior, and sometimes a small yard. In this setup, every homeowner has full control over their property, similar to owning a detached house.

However, when one investor or company owns several connected townhomes and rents them out to different tenants, the entire group of homes may be classified as a multifamily property. In this case, the units function more like apartments within one larger investment property.

The distinction often comes down to how the property is financed and zoned. A row of individually owned townhomes is treated as multiple single-family homes for mortgage and tax purposes. But if all the units are owned and operated under one title, it can be considered multifamily real estate, which affects how loans, appraisals, and property management are handled.

So while townhomes might look like multifamily housing from the outside, they are usually single-family homes unless ownership or zoning rules say otherwise.

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When a Townhome Is Considered Multifamily

• All or several connected townhomes are owned by one person, investor, or company.
  
  
• Each unit is rented out to different tenants under one ownership title.
  
  
• The property is zoned or financed as a multifamily development by the city or lender.
  
  
• The townhomes are part of a single investment property rather than individually sold homes.

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Read Also: Does Garage Space Count as Square Footage?

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When a Townhome Is Not Considered Multifamily

• Each townhome is individually owned and has its own title and lot.
  
  
• Homeowners live in or rent out their own units independently.
  
  
• The property is zoned as single-family residential, not as a multifamily structure.
  
  
• Maintenance and exterior areas are often managed through an HOA, similar to other single-family communities.
  
  

Key Differences Between Townhomes and Multifamily Homes

Even though townhomes often look like multifamily buildings because they share walls and sit close together, they are usually classified very differently. Here’s how they compare in a few key areas:

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1. Ownership

Townhomes are typically individually owned. Each homeowner owns both the interior and the small piece of land beneath the unit. In contrast, a multifamily property such as an apartment building or duplex is usually owned by a single person or entity that rents out each unit to tenants.

This means townhome owners build individual equity, while multifamily investors earn rental income from multiple units within one property.

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2. Maintenance

Townhome owners are responsible for maintaining their own units, including interiors, exteriors, and any small yards or patios. However, shared walls and community spaces are often covered by a homeowners association (HOA) that manages things like landscaping, roofing, and snow removal.

In a multifamily property, all maintenance is handled by the owner or property management company, not by individual tenants.

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3. Financing

Financing is another major difference. A townhome is usually financed with a standard residential mortgage, just like a detached single-family house. Multifamily properties, on the other hand, may require commercial or investment loans, especially if they have more than four units.

Lenders look at different factors when approving these loans. For single-family townhomes, they focus on the borrower’s personal income and credit score. For multifamily properties, they also evaluate the property’s income potential and operating expenses.

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4. Management

Townhomes are self-managed by each homeowner, with some shared responsibilities handled through an HOA. Multifamily properties are generally centrally managed by the owner or a property management company that oversees all units, tenants, and maintenance work.

This makes townhome communities feel more like neighborhoods, while multifamily buildings operate more like businesses.

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5. Shared Walls and HOAs

It’s easy to see why people sometimes confuse townhomes with multifamily housing. They share walls, often have a uniform design, and are part of communities with shared amenities. However, the presence of shared walls or an HOA does not make a townhome multifamily.

As long as each unit is owned separately and functions as its own residence, it remains legally a single-family dwelling, even if it’s part of a row of similar homes.

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Related: What is a Lender Inspection?

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Why the Classification Matters (Financing, Taxes, and Zoning)

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Understanding whether a townhome is classified as single-family or multifamily is more than just a technical detail. It can affect how the property is financed, taxed, insured, and even what you are allowed to do with it.

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Financing

Banks and lenders use the property classification to determine what kind of loan you qualify for. A single-family townhome typically qualifies for a standard residential mortgage, while a multifamily property might need an investment or commercial loan. The type of loan also influences your down payment amount, interest rate, and eligibility for government-backed programs.

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Taxes

How a property is classified can influence your property tax rate. In many areas, single-family homes are taxed differently from multifamily properties because they serve different purposes. For investors, a multifamily classification may offer deductions related to rental income and maintenance, while homeowners may benefit from residential tax relief programs available to single-family dwellings.

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Zoning and Permits

Local zoning rules determine how a property can be used. A single-family townhome is usually zoned for residential use only, while a multifamily property might be zoned for multiple rental units. This difference affects what kind of modifications you can make, whether you can add extra units, or if you are allowed to rent out multiple homes on the same lot.

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Why It Matters to Buyers and Investors

For homeowners, knowing the classification helps with long-term planning and understanding responsibilities under local regulations and homeowners associations. For investors, the distinction determines what kind of returns to expect, how the property can be financed, and how it will be managed.

In short, knowing whether your townhome is single-family or multifamily helps you make informed financial and legal decisions before you buy, sell, or invest.

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Related: Is Multifamily Considered Commercial?

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So Are Townhomes Multifamily Homes?

The simple answer is that townhomes are usually not considered multifamily homes. They may look similar on the outside, with shared walls and uniform designs, but legally they are most often classified as single-family dwellings because each unit is owned separately.

A townhome only becomes multifamily when all the connected units are owned by one person or entity and operated as a single rental property. In most cases, though, townhomes are independent homes that give owners a balance of privacy and community living.

Understanding this difference helps buyers, owners, and investors know how their property fits into financing, zoning, and long-term planning. Whether you’re buying your first townhome or expanding your real estate portfolio, knowing the classification helps you make smarter choices about your investment.

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