Negative cash flow...please review

[Jason Golladay]

I am new to the forum and would appreciate some outside insight.

My wife and I are in the process of buying a 4 plex apartment building. We have been landlords before (although single family) and my question is basically a financial one. The four plex is an easy decision for us...5 minutes from our home and well maintained with 2 long term tenants. Even considering vacancy rates and maintenance/repairs the property should cash flow enough to pay off itself in about 12 to 14 years. We do not need the cash flow for income now. That is putting 10% down.

So here is the caveat, behind the four plex is a duplex offered by the same seller. Maintaining both next to each other would be ideal. However the duplex has a negative cash flow. Both properties together would still cash flow positively but not enough to facilitate much of an early pay off. The duplex is also well maintained and has even longer term tenants.

Of course the question is do you buy negative cash flow property? I like the idea of the property paying itself off early. I would rather not put any other income towards the early pay off of the real estate.

I have done some market research in the surrounding area and it seems the rents are on par with other properties.

Will a duplex appreciate more than a 4 plex?

I plan to hold my properties long term and would like them to be paid off when I retire in approximately 13 or so years. I will be managing the properties and can handle all but major mechanical repairs.

Thank you for your opinions and advice.