Replace a SFH with a Duplex?

[Casey Rawlings]

I am closing soon on a small SFH that I will be renting, but am considering selling/moving the house (its on piers) and building a duplex in its place. There are currently duplexes in the neighborhood, so the zoning isn't an issue. This being my first go at a rental, should I just stick with the original idea of renting the SFH or is the duplex a good idea? The duplex will be a larger investment for sure and I will have two tenants to deal with versus one, but twice the income...Please share your thoughts, good or bad...would love the

[Zach Westerfield]

@Casey Rawlings I would start by running the financial analysis. Do you plan on holding for a long time? If so, run your numbers with a time frame of 10-15 years in mind. Estimate how much it will take to convert to a duplex, then consider what sort of return you will get on that extra money. The final thing to consider is your exit strategy. Do single family properties sell higher per sq ft in that area, or no noticeable difference? There is not set way to consider these numbers, you have to apply them to your own goals. For example, if you sell the old house for $50K, and it cost you $200K to build a duplex, then consider the return on the $150K. if the extra rent is $1000 per mo, then thats an 8% CoC in the first year. there are many different ways to run the numbers and look at things.

from a tenant management perspective, multifamily tenants tend to be more transient than SFR, depending on market. other than that, usually its more desirable to have a multi. Hope this helps