Duplex Investment Opportunity

5 Replies

Hello,

I am new to BiggerPockets and am looking to get started in real estate investing. I will be moving to the Austin area within the next few months and have been on the lookout for a duplex to house hack. The market I am looking at is extremely hot right now and houses are sold within days of being on the market. 

With that being said, I have come across a duplex that is 3 Bed/2.5 Bath for $449,000 with one side currently being rented for $1400 a month. The other half is newly renovated and ready to be moved in. After running the numbers with all of the expenses and assuming I can charge more in rent on the renovated side, I have determined that it is a good deal and could even have positive cash flow after some more renovations are made to the other side after the tenants move out. It seems to be hard to find a duplex of this size at this price in Austin. 

I wanted to seek out some advice from other more experienced people on BiggerPockets to see what any of you guys think of this opportunity. I appreciate an insights on this opportunity.

Is that a typo or is it really $449,000? If so, no, that definitely is not a good deal and would cost you a good bit of money each month. I hope that was a typo in the price.

I'm sorry if there was any confusion. I meant a duplex with each having 3 bed/2.5 bath. These would bring in at least $3000/month in rent. My current calculated cost comes out to -$500 in cash flow. With the goal of building equity and doing renovations to increase the value of the house, does this make sense?

@Nicole A.

Is that $3000 per unit or $3000 total?

What is your goal with the equity, and why are you not interested in cash flow?

Renovations are only worth it to match direct, nearby competition. If you put more money and make it nicer than all over nearby places, you might still only be able to get a little bit more than market rent anyway. You can really only base your rent off of what other nearby rentals of the same size and condition are offering.

A negative cash flow house is not a good deal and it is not something you can scale.  If you are losing $500 a month on this house, do you want to repeat this project 5 times and be out $2500 a month?  If there was a downturn in the economy, not only would you lose money each month but you would also be under water on your investments.  That is a lose -lose scenario.  I suggest you pass and find something that will cash flow better.  You will probably have to look outside of Austin.