What would you do? nicer for 9% ROI, or lesser for 11%?

What would you do? nicer for 9% ROI, or lesser for 11%?

Pocatello, ID · Member since 2016 · 23 posts · 7 votes

I am looking for my second multi-family unit and have two that I am considering. A nicer brick duplex with two car garage that would give me about 9% ROI or an older wood frame triplex that would give me 11% ROI.

Other things worth noting:

1.  The triplex has a family living in one half of it that has been there for 5+ years and the property is currently 'under-rented' (i.e. I could probably get $100 more rent per month.  Addtionally it looks like they may have at least five kids.   There were two bunk bed sets crammed into one of the bedrooms and there was a baby crib in the master bedroom.  They said that they wanted to stay there forever because the rent was so low.

2.  The duplex has an older couple living in one side with four or five yorkshire terriers (!).  They also say that they want to live there until they die, which may not be that long (the man is in his 90s and on oxygen).  They have been in place for nine years.

3.  Both are probably type C to B- properties but the duplex is really in pretty good shape.  The duplex has newer vinyl windows.

Well i think I may have answered my own question by posting this but I wanted some other opinions. Go for the ROI or for less headaches and less money? I use a PM so it's not a lot of headaches for me personally.

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  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    hmmm...I am not sure I would want to keep either tenant in that scenario. Makes no sense to subsidize tenants in most instances. We have dogs, but I generally don't allow them in my rentals. Are you buying under market? 

  • Pocatello, ID · Member since 2016 · 23 posts · 7 votes
    10y

    No, not buying under market.  Initially I wasn't going to allow dogs but when i bought my fourplex it came with two tenants with dogs so I went ahead and allowed dogs in the other two units and I have found that this generally has helped me attract renters.

    As for subsidizing tenants we are definitely in agreement about that!

  • Investor · Cedar Park, TX · Member since 2016 · 463 posts · 177 votes
    10y

    i'm biased to the brick exterior it makes maintenance way lower. But you were thinking in the right direction you will need to raise rent soon as their contract is up.

  • Pocatello, ID · Member since 2016 · 23 posts · 7 votes
    10y

    I went ahead and put in my offer on the brick duplex and it was accepted.  I liked the brick exterior and newer windows and thought that was worth a bit more than making an extra percent or two each month.

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