AirBNB - Single Family Or A Duplex? First Time Buyer.

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AirBNB - Single Family Or A Duplex? First Time Buyer.

Amity Word
Atlanta · Member since 2021 · 22 posts · 8 votes

Which should I do as my first investment?  My goal is long-term buy and hold and Cash flow from Short-term rentals. 

Single family vs. Duplex?? I'm totally new real estate investing as this will be my first property. I'm just not sure whether to start with single family or multi-unit. The catch is I'm planning to go the SHORT-TERM rental (airbnb) route with my buy and hold strategy. My goal is CASH FLOW CASH FLOW CASH FLOW and LOWER RISKS as a first time buyer with little funds.  So I'm aiming for CASH FLOW to build my portfolio quicker. 

SINGLE FAM Scenario 1: The single family home 3bd/2ba home could get me $27K/annually via airbnb ideally without considering non-peak season and I'd want this single family only for short-term rental purposes only; not long-term. Plus I can take advantage of the 3% conventional loan for First time buyers.

DUPLEX Scenario 2: I can get a Duplex (2bd/2ba each unit) and make approx. $13K/annually if I long-term rent one side and short-term rent the other side. With duplex you have more options/diversity on the short-term/long-term rent so I can get the experience of both worlds and I think more security in knowing that I have one long-term tenant on the other side. The plus is I get the 3.5% FHA loan. If I choose to go duplex first; then I'll never ever ever get to take advantage of the 3% conventional first time buyer perk for single family. If I choose the single family, I believe I can always get my 2nd property with the FHA 3.5%. So, Whew! That was a mouth full.

P.S. I've already done my research on the "best locations" for STR (short-term rental) in my area and crunched the numbers and did my homework which is how I got my estimated the numbers above.

Which one should I do first?

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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
4y

Hey @Greg R., the comment @Leslie Anne Morris is referring to was mine about the condo experience without the amenities.

https://www.biggerpockets.com/...

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  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Hey @Amity Word, quick question on the FHA. How do you get the 3.5% down and not be owner occupied? From what I understand the FHA first time home buyers is for owner occupied not investment properties.

    What is the purchase price of each? How did you come by your numbers? What is the estimate nightly rate and occupancy? Just need a bit more data to compare.

    1Reply
  • Greg R.
    Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes
    4y

    Ok, in scenario 1 you will gross 27k annually. However, I'm a little confused about your annual gross on option #2. Is the 13k just off the one side with a long-term renter plus whatever you'd make off the other unit on Airbnb? 

    What is approximant cost for each of these options? 

    There is a lot to dissect here. What does the duplex look like, is it in an ok neighborhood? Many duplexes are in not too nice of areas where guests wouldn't want to stay.

    Assuming everything is equal, I'd probably opt for the duplex. You have redundancy in the duplex, so if you have vacancy w/ a long term renter you could hopefully make up for it with the STR. Also, if your STR starts performing better than expected, you can convert the other side to an STR as well and double up.
    Also, if the government steps in and shuts down STRs (city, county, etc.), you'd be in a much better position to cash flow with a duplex that a single family residence. 

    2Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    Duplex and house hack! 

    2Reply
  • Jimmy Woodard
    Walnut Creek, CA · Member since 2020 · 285 posts · 318 votes
    4y

    @Amity Word if the goal is cash flow it sounds like the SFR is the clear winner at double the cash flow! If you need any help setting up your STR for success after you acquire it, feel free to DM me. Good luck!

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y

    You’ve got a lot more research to do on lending. 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    2Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    4y

    We just covered a very similar question on another thread and the consensus was duplex's aren't very good STRs. Less privacy and no amenities like a condo. SFH is a better choice.

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    You may be able to make more with a Duplex but it come with more hassels and potential complaints. I would personally stick with a SFR house.

    1Reply
  • Michael Dumler
    Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
    4y

    @Amity Word, neither of these scenarios is possible. The 3% conventional and 3.5% FHA insured are owner-occupied loan products. If you don't live in the property for the first year, you're committing mortgage fraud. I'd recommend you start researching house hack strategies. You're on the right path, but you need to understand the lending side of this industry. Hope this helps!

    4Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    4y
    Quote from @Amity Word:

    Which should I do as my first investment?  My goal is long-term buy and hold and Cash flow from Short-term rentals. 

    Single family vs. Duplex?? I'm totally new real estate investing as this will be my first property. I'm just not sure whether to start with single family or multi-unit. The catch is I'm planning to go the SHORT-TERM rental (airbnb) route with my buy and hold strategy. My goal is CASH FLOW CASH FLOW CASH FLOW and LOWER RISKS as a first time buyer with little funds.  So I'm aiming for CASH FLOW to build my portfolio quicker. 

    SINGLE FAM Scenario 1: The single family home 3bd/2ba home could get me $27K/annually via airbnb ideally without considering non-peak season and I'd want this single family only for short-term rental purposes only; not long-term. Plus I can take advantage of the 3% conventional loan for First time buyers.

    DUPLEX Scenario 2: I can get a Duplex (2bd/2ba each unit) and make approx. $13K/annually if I long-term rent one side and short-term rent the other side. With duplex you have more options/diversity on the short-term/long-term rent so I can get the experience of both worlds and I think more security in knowing that I have one long-term tenant on the other side. The plus is I get the 3.5% FHA loan. If I choose to go duplex first; then I'll never ever ever get to take advantage of the 3% conventional first time buyer perk for single family. If I choose the single family, I believe I can always get my 2nd property with the FHA 3.5%. So, Whew! That was a mouth full.

    P.S. I've already done my research on the "best locations" for STR (short-term rental) in my area and crunched the numbers and did my homework which is how I got my estimated the numbers above.

    Which one should I do first?


     If your top goal is cash flow, then duplex is probably the better bet.  + as other commenters have mentioned, make sure you get a good understanding on what you are allowed to do with the different loan options, as those 3.5% loans are intended for owner-occupancy, not pure investment properties

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    1Reply
  • Greg R.
    Investor · Dallas, TX · Member since 2016 · 887 posts · 1k+ votes
    4y
    Quote from @Leslie Anne Morris:

    We just covered a very similar question on another thread and the consensus was duplex's aren't very good STRs. Less privacy and no amenities like a condo. SFH is a better choice.

    Hi Leslie, can you link to that thread?

    1Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    4y
    Quote from @Greg R.:
    Quote from @Leslie Anne Morris:

    We just covered a very similar question on another thread and the consensus was duplex's aren't very good STRs. Less privacy and no amenities like a condo. SFH is a better choice.

    Hi Leslie, can you link to that thread?

    I unsuccessfully tried to find it. It was in the last few days. Not my thread, just one of many I commented on

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Hey @Greg R., the comment @Leslie Anne Morris is referring to was mine about the condo experience without the amenities.

    https://www.biggerpockets.com/...

    4Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    4y
    Quote from @Michael Baum:

    Hey @Greg R., the comment @Leslie Anne Morris is referring to was mine about the condo experience without the amenities.

    https://www.biggerpockets.com/...

    Thank you, sir! 
    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    4y

    Anytime Leslie!

    1Reply
  • Amity Word
    OP
    Atlanta · Member since 2021 · 22 posts · 8 votes
    4y

    Thank you all for your insight.  Yes, I'm aware that this will begin as a primary residence but not forever.  There's so much to consider here.  I think ultimately just getting started will be important regardless of which way I go.  Thank you for your posts this gave me a lot of insight! 

    0Reply
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