multi-unit purchase to leverage down payment

Wait, so you want to rent out the other units, or sell the other units in the TH?

Some of this is location dependent. You will probably find that the cap rate varies and is worse in "prime" locations.

Cap rates are generally 3-4% and keep in mind, this doesn't always account for taxes, maintenance, etc. If you take everything into account, mostly I see 0 or negative cap rates. On the flipside, if prices go up, you will make up for some of that low cap rate. That being said, if you have $2m downpayment, $8m townhouse, you will have a $30k per month mortgage. You stated that you don't want more than a $500k mortgage -$2,500 monthly mortgage.

What is your plan for months when you are having issues with renters? Are you aware it is difficult to remove a tenant and can take 6 months? Assuming the bank would give you the loan (not likely, unless you have a very high income and are just being conservative in regards to you mortgage), your risk would be insanely high. As a general rule, if you have an investment property, you should have about 6-12 months of mortgage as a buffer. Maintenance will also be prohibitive.

On the flip-side, you can buy multifamily apt complexes in the midwest and south for 6-8% cap rates. These states are more landlord-friendly and, additionally, due to the inexpensive prices, would allow you to buy several units, which would decrease the volatility associated with owning multifamily homes. You could then take the cash flow and use that to help pay your mortgage. Otherwise, you are making a massive speculative bet. Honestly, it will likely pan out over the long-run, but there is a reasonable chance in my estimation (over 20%) that you could have a liquidity crisis at the wrong time and end up getting wiped out. I've seen it before, in very similar circumstances.

i agree with nyc1234 that this could be a dangerous time to be buying Real Estate with a negative carry.

I'd also like to add something I forgot to mention - multifamily in the entire country is at the top range of the cap rate bubble, obviously related to the low interest environment. At multiple real estate meetings I have been to, old-school multifamily investors have warned that this is not the best time to buy these unless you know what you are doing. 2011-2012 was the best time for that.

"2011-2012 was the best time for that. "
I thought things were potentially overprice even then, but your perspective gets skewed when you can remember selling small buildings in Brooklyn for 3X RR.

I meant in the rest of the country, specifically, the midwest and south.