The short version: at high prices with a small down payment, these properties usually do not cash flow, and the people buying them know it. In expensive California markets, a brand-new investor putting the minimum down on a rental rarely pencils once you add the higher rate on non-owner financing and the mortgage insurance. The buyers who make it work are doing one of a few things: - Bigger down payments. Most commonly, they put down far more than the minimum, specifically so the property cash flows from day one. - Buying for appreciation. Some are comfortable feeding the property in the meantime and know exactly what that costs them. - Strategy over plain buy-and-hold. Flips, short-term rentals that produce much stronger income than a long-term lease, or trading equity out of an already-appreciated property into a better one. Multi-family is its own puzzle. On a 3-4 unit purchase with FHA, the self-sufficiency test requires that 75% of the market rent for all the units cover the entire mortgage payment (the 25% holdback covers vacancy and maintenance). In high-cost areas that test is very hard to pass, which is why house-hackers gravitate to duplexes; 1-2 unit properties are exempt from it. Even duplex math is tough in pricey markets. In more affordable parts of the country, the low-down house-hack on a small multi still works well; it's mainly the expensive coastal markets where the leverage no longer does the job. If you want to pressure-test a specific property, we can run the real numbers with you on a free Roadmap conversation.