Buying multiple Duplex's

[Rich Czapkay]

My business partner and I have an opportunity to purchase a number of duplex's (4-5) in a brand new development. We are brand new to RE investing and have struggled in the last year trying to get things going. Is this too much of a chunk for beginners? We can come up with 20% for a down payment but not much more than that. Being fairly conservative with the numbers it has a slight positive cash flow. At this time we are looking at a 5 to 10 year investment. This is in Central Texas somewhat near Austin so I think property values will continue to increase. Any thoughts?

TIA

Rich

[Bryan Noth]

@Rich Czapkay few questions I would do in my due dilligence:

How many more units is the builder expecting to turn out each year?  These units will be your competition down the road and could impact vacancy.  

How is the rent compared to other comparable units as well as to the median rent for the area?  

And with new build multifamily, make sure to consider incentives.  Some builders have units marked as $1495/unit but when you dig deeper the average DOM to lease was 60 days and the builder/PM was offering first month as rent free.  That turns into an effective 90 day vacancy and approaches 25% real quick.  Plus, with newer units you typically do not have sufficient history to see if tenants are staying long term or if the turnover is high.