Tampa, FL · Member since 2017 · 22 posts · 7 votes
Looking for advice/feedback on purchasing either a duplex or quadplex where both have almost identically the same cash on cash return percentage and income to expense ratio. Anything else to look at that I might need to consider to help make the decision more easier? Same condition, same area, same age of home.
Hi @Jason Thomas! The answer to this question really comes down to your goals. If you are going to be house-hacking and want "the most bang for your buck", then 4 units almost always trumps 2. If you are buying it to hold as a traditional rental and the cashflow is identical between the two (like, truly a duplex is spitting out $200/month total cashflow and a 4plex spitting out $200/month), then really the ONLY advantage to the 4plex is a bit of added diversification. The added complexity of 4 tenants to manage versus 2 makes a duplex that cashflows the same as a fourplex almost a no-brainer, though.
However, if the ConC is the same, then the 4-plex is the no-brainer as long as the operation style and tenant mix the property will have is going to fit with your overall investing goals.
4 is more, so if you're going to score, score more!
Hi @Jason Thomas! The answer to this question really comes down to your goals. If you are going to be house-hacking and want "the most bang for your buck", then 4 units almost always trumps 2. If you are buying it to hold as a traditional rental and the cashflow is identical between the two (like, truly a duplex is spitting out $200/month total cashflow and a 4plex spitting out $200/month), then really the ONLY advantage to the 4plex is a bit of added diversification. The added complexity of 4 tenants to manage versus 2 makes a duplex that cashflows the same as a fourplex almost a no-brainer, though.
However, if the ConC is the same, then the 4-plex is the no-brainer as long as the operation style and tenant mix the property will have is going to fit with your overall investing goals.
4 is more, so if you're going to score, score more!
It's not the property that matters - it's the opportunity. So if all else is the same, dig deeper:
1. Compare markets. Which has the higher rent price demand? Which has greater appreciation? I'll take a duplex in a high demand market over a quad in a so-so market every time. More doors does not automatically equal more income.
2. Upkeep/Maintenance. What will each need in terms of rehab/maintenance? Roof, AC, Water Heater - these are items that have an impact on the cost and engagement of insurance.
3. Taxes/Insurance Cost. Have your broker run the numbers.
4. Financing. Will it cost you more to do a quad in terms of down payment/interest rate?
Real Estate Investing is a complex business...it's not just about dirt or doors, it's about what will provide you the greatest cash flow and overall ROI.