Duplexes

[Kevin Jackson]

I am searching for my first investment property. Is it better to start with a $30k duplex or $100k and above. Can someone share why a person would want a more expensive over a lesser cost duplex. What are the pros and cons of each if you don't mind? Thank you!

[Brent Coombs]

@Kevin Jackson, I see you have been poking around BP for over six months now, which means you should really be able to give a fair summary of potential answers to your own question.

Answers relating to neighborhood, age/condition of property, comps in the area, demographics, your ability to finance, ROI, ARV, your own RE goals, etc...

Care to give it a go? Cheers...

[Valerie Reed]

You might find that the more expensive duplexes are in better areas, in better condition and command higher rents. Generally, those are the reasons that I would choose a more expensive duplex over a less expensive one.

[Account Closed]

@Kevin Jackson

A $30K duplex would probably have more cash flow, but also have more vacancies, repairs, and evictions.

I've been looking for a lower priced duplex, under $100K. There are a lot of them on Redfin and Zillow in Georgia. When I go look at the neighborhoods, I usually get disappointed. I don't want to invest in a bad area. 

[Jeff Bonner]

@Account Closed, How did it go? Have you found one? I put an offer on a $100k-ish duplex in my area recently. If it works out, I expect to have to be more hands on than I am with my SF rental, but cash flow potential is so good that I have to try. Should find out today.

[Account Closed]

@Jeff Bonner

I haven't found the right one yet. There are a lot of duplexes in my price range that are on the MLS, but for one reason or another I haven't made a move on them yet.

A lot of properties look good in the pictures. Then, I drive by them and see they are in a run down neighborhood, or the distressed condition of the property is too much for me to deal with right now, or when I run the numbers it just doesn't cash flow enough. 

I just had a little HVAC scare with my single family that has me analyzing all potential investments with very conservative numbers. I thought I was gonna have to spend $5k+ to replace the entire HVAC system. After having another contractor look at it, turned out to be some burned up wires. It only cost me $135 to fix. That being said, I will never buy another property that only cash flows $100 - $200 per month. Repairs and vacancies eat it up too fast. 

I have also been mailing yellow letters to owners of duplexes all around me. I'm hoping to get a better deal than off the MLS, or maybe find someone who will owner finance me. I just got a call from a guy that had 6 duplexes next door to each other! He wants to sell all 6 together! I think it could be an awesome investment for someone. It's too big of a deal for me. I don't have enough cash and he doesn't want to owner finance them. I've been trying to find some partners or private lenders who might be interested.

So, I'm still working at it. I'm gonna find a great property eventually. 

[Jeff Bonner]

Yeah, 1-200 in cash flow beyond mortgage, taxes and insurance is a nightmare waiting to happen. I have a comfortable $400-500 a month in my sfh rental, and that's just enough for me to keep it. I'll try to raise the rents next year.

Right now is a challenging time to find a good deal. To me, it's beginning to look a lot like 2007. Easy money, and everything is "a deal" according to agents. Nothing wrong with getting as cash as you can muster together to wait for an opportunity or just general chaos. Given the fact that our easy money/poor loan origination created bubble of 2007-09 was "fixed" with more of the same, I wouldn't be too surprised to see Housing Crash, Part Deux. I'm not holding my breath, and intend to move forward with a deal today, but I wouldn't burn all my liquidity for a down payment with one deal at the top of the raging bull market we've seen in everything from real estate, bonds and stocks. Something has to give. Maybe!

[Siedda Herbert]

@Kevin Jackson Duplexes that are close to market value ("expensive") usually have minimum repairs, are in a great area, 100% occupied, great cash flow. A $30k duplex will most likely need repairs. Depending on the repairs, the $30k duplex could possiblly be a $100k duplex once repairs are finished.