4 unit property for first investment?

3 Replies

I've found a 4 unit property for sale in my price range which also has a store front as well with a current long term tenant. This would be my first investment property. should I go for it or should I start with something smaller?

Fully rented, the property would generate roughly $2300 a month and my mortgage would only be $900.

As for the subject property Idk?? Not enough information.. But a 4 plex in general yes! It was my first property. Fixed rate mortgage. Tenants like the small complex feel. My experience has been less turnover than larger complexes and slightly higher occupency. I own 4 today. Imo they are kinda a sweet spot and great place start.

My first investment was a fourplex and I had zero prior experience investing in real estate or managing properties. I did spend over a year educating myself primarily through books and BP. I inherited 3 tenants and the vacant unit was left a mess. I spent a couple weeks cleaning it up with new carpet and paint and I had it rented in 2 weeks over the Holidays. What was great is I was still cash flow positive with the 3rd unit vacant. This is the benefit of multi family properties.

I would absolutely recommend starting with a fourplex. If you are inheriting tenants, the initial transition can be difficult and require quite a bit of time up front. But once you get through that and properly retrain your tenants, it can be fairly hands-off.

Many will recommend staring small and easing into REI. I chose to jump right into a larger unit and do not regret it. Yes it was a bit hectic at first, but there is no better way to learn than actually doing it. Do your due diligence, make sure the numbers are good, draft a solid lease, train your tenants and screen new tenants thoroughly.

I also recommend getting an inspection on the property and find an inspector who is willing to do a fourplex, it may be a bit more expensive thanks a single family, but I have found it is worth it!

Don't forget to calculate all the extra expenses when doing your analysis. Rent minus mortgage does not equal cashflow.

Taxes (after purchase re-assessment if purchase price is higher than current city valuation)

Insurance

Water

Sewer

Gas/Electric (if payed by owner)

Repairs

Capital Expenditures

Vacancy

Property management (even if you intend to self manage, calculate this for the future if you eventually want to be hands off)

Trash removal

Don't go with your blinders on, do a real analysis on what the actual expenses will be. You will thank yourself.

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