2 investment options: 8 SFH vs 4 duplexes

2 Replies

I am evaluating 2 long term rental purchase options. One is in a growing market(Triad, NC) 8 single family homes 60-90k value each, priced 15-20% below market value. Rents are below market, older homes, decent areas, will need updating to increase to market rent. 2nd option is 4 duplexes in a small town(pop 2000) in northern WI. I have one rental there already. These units are mostly updated, renting at market values, so the immediate cash flow is much stronger($1100 vs $600), but they are priced at 90-95% of value & do not have the appreciation potential of the larger market. I feel like the growing market is the better play, but since they are long term buy and holds am I putting too much emphasis on appreciation. Let's assume financing costs are similar, here is an overview. Thoughts on these 2 options are appreciated. 

Price Value Current rent Max rent Current cash flow Potential cash flow Improvements
NC properties 450000 550000 4865 6250 600 1600 50-75k
WI properties 400000 450000 5300 5600 1100 1300 10-15k

@Josh Buchanan Hard to read your numbers in this format. How experienced are you? Are you managing these properties yourself? All things being equal I would vote for the local market. If you are using a PM and cash flow is your primary factor I would go with the best COC return based on solid numbers.

Sorry, the #'s did not line up well when I posted. I currently have 1 duplex and 2 SFH. 2 local, 1 out of state. Both are far enough away that I would be using property management. The immediate cash on cash is much better on the duplexes(despite those WI property taxes), which I'm sure I should place much more emphasis on than potential appreciation and rent increase, since that is uncertain.