Duplex or Fourplex for my first investment?

Question

So I'm moving from LA to Portland, saving my pennies, and looking to buy my first property (likely FHA 5-15% down, owner occupied). Inventory is scarce and prices are steadily rising. I will have about $50,000 for down payment and closing costs. Would it be better to start with a duplex that is about $300,000 that brings in $2,000-$2,500 in rents or a Fourplex for $500,000-$650,000 that brings in $4,000-$5,000 in rents?

Account Closed · Answer

In Portland there are many single family homes with ADUs, which is essentially 2 units on one tax lot. You could live in the smaller ADU and rent out the house.

In other words, you may not want to limit your search to plexes.

Shoot me an email/PM when you're getting ready to start looking and I'll send you some listings. There are some search parameters and words I can use in MLS that can help to find otherwise overlooked properties.

Rob Witt · Answer

Depends on what your risk tolerance is. Why are you investing in either? Both could work the duplex may work better if you have no experience managing a property. or the fourplex is good for more monthly income.

Ned Carey · Answer

It looks like you are talking about hypothetical examples.  How about a really great killer deal on a duplex vs an avg deal on a 4 plex. Which would you chose? What if it were reversed?

This is a decision I would make by comparing the ROI and risk reward of actual deals in front of me.

Evan Bellingar · Answer

Good advice on this thread.

I suggest keeping your options open, your search parameters broad, and be ready to strike when a deal comes along. They do come along, even in Portland. I have bought several houses with ADUs that were listed as single family homes on the RMLS and only a few words in the listing suggested there was actually a second dwelling on the property.

Good luck and be patient.

Evan

Scott Radetich · Answer

Tell your agent you want a 2-4 unit, run your numbers and buy the deal that makes sense.  don't forget about those Triplexes;)   Also, I've seen several deals where someone is selling 2 duplex's on neighboring lots, so its basically a 4plex deal. You wouldn't want to miss out on that if you are only looking for a 4plex.

Grant Sample · Answer

I'm in the same situation. I've decided to go with the fourplex route for the cash flow and from that cash flow I'll be funding future deals. Your plan sounds almost exactly like my plan. Kinda nice to hear others thinking the same way. Best of luck to you! Cheers

Melissa Dorman · Answer

I'm looking for cash flow and I want to build a portfolio of 30 units in the next 8 years, where each unit cash flows $100-$200 each. I have no experience managing property, but I do manage a small car rental business, so I have experience training tenants and dealing with sticky situations. I'm young and have a pretty high tolerance for risk at this time.

Duplex or Fourplex for my first investment?

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