Should I buy a SFH or wait to buy a duplex?

Question

I currently rent in DFW. I'm in the process of saving up to buy my first property next year. Ideally, I'd like to buy a small multifamily and house hack. However, small multifamilies in the entire DFW metroplex are selling for more than I will be able to afford next year. The only ones I can afford are in really bad areas and inventory there is even low.

However, single family homes in great neighborhoods in my price range are everywhere here. The only caveat is I'm not willing to house hack a SFH.

I could wait, continue renting, save more money, and go the small multifamily route in 2-3 years. Or I could go the SFH route next year. Either way I'll be going with a low down payment option.

My question is, is it possible to get started with REI by purchasing a SFH? If so, what would be the next step after that, and when? During that time would you recommend I save up for another low down payment, rent out the first home and buy another? Or, should I just wait the 2-3 years to buy a duplex/triplex?

Austin Fowler · Answer

Have you considered investing out of state? There are many markets where enterprises are much lower and yet are very favorable to making good profits either flipping houses or using the BRRRR strategy. I can make an introduction to one of my friends doing this successfully if that is of interest to you. Just email me.

Jules Aton · Answer

One of the main reasons I generally favor SFH is for ease of resale. It could be area specific but where I an in addition to being more expensive multi-family and commercial properties generally aren’t as easy to sell. Biting off a smaller piece made sense to me as a cash strapped young person. Possibly just a life lesson but circumstances change and I didn’t want something that I couldn’t liquidate relatively quickly. Keep us posted!

Wale Lawal · Answer

@Heather Faggiano

Absolutely, you can get started in real estate investing with a single-family home—it’s actually how many investors begin. If you buy in a solid neighborhood with appreciation potential and good rental demand, you can rent it out later and either refinance or leverage it with a HELOC to fund your next deal. This strategy helps you build equity and experience while staying active in the market rather than waiting on the sidelines. Once you're ready for that duplex/triplex, you’ll be in a stronger position financially and mentally. DM me and I’ll point you in the right direction on local neighborhoods, loan options, and how to structure your first SFH for future investment success.

Good luck!

Kerlous Tadres · Answer

If the numbers work and you're in a good area, buying an SFH now lets you stop renting, build equity, and later turn it into a rental. After living in it for a year (to meet loan requirements), you can move out, rent it, and use another low down payment loan on your next property.

No need to wait 2–3 years if you’re ready now just make sure the SFH would rent well down the line. It’s a solid way to start building your portfolio and gain experience while saving for the multifamily you want later.

Nicole Heasley Beitenman · Answer

I house hacked a SFH for 3 years right out of college. Not having to pay my own mortgage was what allowed me to save up the down payment for the next property.

I'd consider what your finances look like with each option. Will buying the SFH save money on rent and allow you to accelerate your savings for the MFH? If so, I'd do it. Especially if you can get one below market value that provides opportunity for forced appreciation; you could pull that equity out later to assist with the MFH purchase. Otherwise, you'll drain your savings for the MF purchase and have to restart at the same rate your were saving before. Meanwhile, prices will keep going up.

Also, how fast are MFHs appreciating in your area? If they're appreciating at the same rate of your savings, you might find yourself constantly behind on your goal amount. If buying a SFH won't help you reach your goal of buying a MF sooner, I'd stay put and consider some kind of side hustle to accelerate your savings rate.

Jeremy Horton · Answer

I personally like the idea of waiting and doing a small MFH - no deal is better than a bad deal and waiting is a strategy. It also sounds like capital is a concern - save up, run numbers, analyze areas and properties - that in itself will take around a year. So you'll be learning and saving for a year or so. There's no need to rush - quality > quantity.

This strategy will allow you to house hack (if you choose) do an FHA (you will have PMI - I think for the entirety of the loan if you don't put at least 10% down) and possibly get a better interest rate (I don't think rates will increase in 2-3 years).

Also MFH tend to cashflow better than SFH (especially when it comes to low down payments). The risk is less - since one unit being vacant is less than an entire house being vacant.

If you go the SFH route - just get a started home in a good location. Ideally something slightly distressed or something you can add value to. I would personally do a live in flip (small cosmetic rehab), fix it up then sell it after a year - roll that money into a small MFH (or rent it out if the cashflow is good enough after accounting for all expenses).

JooYung Choi · Answer

Hi Heather,

Personally, I would start investing sooner than later because the longer you hold, the more equity you'd be able to build. You wouldn't be able to refi out unless you have 20% equity in the property so if you are planning to do renovations, that would be the best way to get to that equity.

One thing to note is that is generally harder to go from SFH to MFH, but not impossible. Also if you have a FHA loan on your profile, you would not be able to get another one until you refi out. Stacking SFHs utilizing low down payment owner occupied loans is a great way to build your portfolio fast! Just target neighborhoods with high appreciation potential and strategically move to your properties.

good luck!

Should I buy a SFH or wait to buy a duplex?

Should I buy a SFH or wait to buy a duplex?

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