Best market for duplexes under $100k

Multi-Family and Apartment Investing
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Best market for duplexes under $100k

Sean Johnston
Rental Property Investor · Westminster, CO · Member since 2022 · 12 posts · 12 votes

I am looking to invest in a duplex or triplex for under $100k. My goal is get $150/door after the mortgage. Overall I would prioritize cashflow over appreciation. Is this realist? If so in what markets?

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
4y

@Sean Johnston

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    4y
    Quote from @Sean Johnston:

    @Bob Stevens I interest in a multiple unit property to help hedge the risk of the entire property being vacant at once. Do you think it is more realistic to find a turnkey single family for $100k? I appreciate the honest feedback!


     Very easy to hit the $100k mark on a C-grade single family in the Cleveland market. What you want to do is make sure you are running your comps to ensure you aren't overpaying for the neighborhood. Lots of folks just look at price to rent ratio and forget this key point. Not focusing on anything outside of the price to rent ratio is how you lose money in this business.

    2Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    @James Wise correct, I have many clients from overseas that bought ( not from me, some French  low life from Miami  )  based on 10, 12, 14% net caps. However when I show them the area they are very disappointed. One example is a 600 sq ft SF on Colgate for 80k, and was told it was turn key. Well it needed 20k in work. So now they are all in 100kish,Overpriced by 40k. But the rent is 950 so they " think' they got a great deal. 

    All the best James 

    1Reply
  • Luke Ache
    Member since 2022 · 25 posts · 11 votes
    4y
    Quote from @Bob S.:

    @Luke Ache its all about screening. I have delt with  low income tenants for 10 years. Once in a while there is an issue. But to get the 20%++ net caps its worth it , 

    Good Luck 

    @bobstevens. I hope you found a system that works for you. Just the thought of having to deal with evictions makes my stomach turn-I absolutely  believe in focusing on quality of tenants. I rent in an apartment complex that was rated #1 in the whole state of Alabama, it is called The Collins, they are extremely selective, their occupancy rate is close to 100%, evictions are unheard of. I consider this a "model" apartment complex.

    2Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    Killeen Texas? 

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    @Luke Ache I do not deal with any of the day to day nor do my clients, PM handles all. Not many evictions as the govt pays the rent. Again its all about screening.  BTW what is your net cap ? 

    2Reply
  • Tyler Haanen
    Rental Property Investor · Milwaukee, WI · Member since 2017 · 60 posts · 40 votes
    4y

     Hey Marcus when you say roughly 30K for each unit, what type of quality are you talking about with regards to the improvements you make? Type of flooring, cabinet quality, appliances etc. You can be as general or specific as you like, I am just curious :) I understand it can be neighborhood dependent, but also personal preference. 

    Reason I ask, is I am finding that rehab estimation is my weakest skill right now, and I am trying to figure out the best ways to cultivate it. I also will be doing some rehab on a property soon.

    1Reply
  • Khandbari Rai
    Investor · California, CA · Member since 2018 · 50 posts · 8 votes
    4y

    @Aj Parikh, can you share info on turkeys company that you been using.

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    4y
    Quote from @Khandbari Rai:

    @Aj Parikh, can you share info on turkeys company that you been using.


    Hey, just sent you a DM  

    0Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Sean Johnston you can find it Niagara Falls NY. It’s pretty much the highest risk market in the state, but doubles are well below 100k and rent rolls are 1500+….. assuming your tenants pay and don’t ruin your units.

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  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    4y
    Quote from @Sean Johnston:

    I am looking to invest in a duplex or triplex for under $100k. My goal is get $150/door after the mortgage. Overall I would prioritize cashflow over appreciation. Is this realist? If so in what markets?

    Your late to the party, 3-4 years ago there were tons of those, now the buyers at 80k from 4 years ago are selling off for 125k and pocketing a quick buck. Buying at 80k now puts you in neighborhoods not suited for an out of state investor.

    3Reply
  • JayCinta Henry
    Investor · Mesquite, TX · Member since 2019 · 111 posts · 15 votes
    4y
    Quote from @Eliott Elias:

    Killeen Texas? 


     All I have from Killeen has been in the 400k range but quads. Do you have any leads?

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    @Sean Johnston  Yes,SF for 100k or less, sure , but  you are not going to get a 3 unit for all in  100k, or even a double. well maybe , but only if you are cash

    Good Luck 

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    @Account Closed well as long as they have a team here they will be just fine. Its all about knowledge and your team , 

    Good Luck 

    0Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y
    Quote from @Tyler Haanen:

     Hey Marcus when you say roughly 30K for each unit, what type of quality are you talking about with regards to the improvements you make? Type of flooring, cabinet quality, appliances etc. You can be as general or specific as you like, I am just curious :) I understand it can be neighborhood dependent, but also personal preference. 

    Reason I ask, is I am finding that rehab estimation is my weakest skill right now, and I am trying to figure out the best ways to cultivate it. I also will be doing some rehab on a property soon.

     30k/unit is really just a ballpark number to understand the principle, some manage to do it with less, but you can spend a lot more. Best advice I can give you in a post is buy as much quality as you can afford. It will cost just a little more, but last twice as long and you will be glad you did it. If you want to brush up there are 2 good books in the BP book store by J Scott - one is about flipping the other about estimating rehab cost.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Joe Hammel:
    Quote from @Sean Johnston:

    @Joe Hammel Thanks for the info. From what I have heard a lot of investor avoid Detroit area due to economic reasons. (Jobs, infrastructure, growth rate, etc.) Is Detroit a good market for cashflow but not appreciation or am I missing something. I am just starting out and down have a large amount to invest.

    "Metro Detroit is not an appreciation market" is another pretty common misconception. Attached is a photo of the actual MLS data of Oak park, MI. A city just outside of Detroit, where I recently purchased a property. 10 years of year over year 24% average annual appreciation. I paid $125k and rented that property at $1500 a month and it will cash flow $400+ a month. All the markets we buy in have seen 10-24% appreciation in the past 10 years. I can send more charts. The MLS data doesn't lie.

    As far as jobs go. Metro Detroit is home to over a dozen fortune 500 companies. Auto, Hospitals, and Mortgage industries lead the pack, with plenty more behind it. People like to lump "Detroit" and auto, in as all of michigan but they never go a layer deeper and see the crazy growth of the suburbs. 

    My entire rental portfolio is here and I cash flow a lot, have high roi, and GOOD locations. I've almost doubled my equity in the past 3 years through appreciation and sweat equity. We and clients are seeing huge success. We just stay away from areas that don't show signs of growth or such.

    when i started HML in Detroit in 2002  the values were right in line with teh 2017 to 2018 values you have in this chart.. then the GFC hit and those homes went down to the 2012 values in your chart along with many other markets that did the same thing. so time heals all real estate wounds it depends when you bought.  If you bought in 06 you paid over 100k if you sold in 2011 you lost 70K    
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  • Teri Fleming
    Member since 2019 · 1 post · 0 votes
    4y

    @Aj Parikh, can you share info on turkeys company that you been using.

    thank you!

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y
    Quote from @JayCinta Henry:
    Quote from @Eliott Elias:

    Killeen Texas? 


     All I have from Killeen has been in the 400k range but quads. Do you have any leads?


     1105 N 12th ST, Killeen Tx 76541
    88k 

    0Reply
  • Jennifer Jo McCallonBusiness Member
    Member since 2020 · 62 posts · 59 votes
    4y

    I think you can find this in Braddock, PA, but why go so low? Even if you are paying all cash, I would leverage instead. If you are getting a loan, the closing costs are the same (escrow fees, loan fees, title insurance), so you are better off buying in the $200k range. 

    [email protected]510-545-6390
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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    4y

    @Sean Johnston

    Is it possible? Yes. Is it a good sort of first investment for a long-distance investor? Probably not. Am I telling you this because I have something to gain? No.

    I have two duplexes in the Pittsburgh area at the moment. I bought one vacant for $45K cash a few years ago. I live in half of it. It's 100 years old. I have another 80-year-old duplex that I bought a few years later. Paid $105K cash for it. It is one street over from where I live. I bought it from a guy who lives in Georgia and was trying to remote-manage it from there. He had a good run, four years. Then he sold it to me after one of the tenants racked up $5K debt with him during the COVID moratorium and the other screwed him for $2K more.

    0Reply
  • Qulia Brunson
    Real Estate Broker · Charlotte, NC · Member since 2014 · 76 posts · 21 votes
    4y

    I own duplexes in St Louis and Milwaukee that we're purchased for under $100k. Cash flow is good but this is relative to the area of course and the condition of the property. I researched other areas like Detroit, several cities in Ohio, Indianapolis, and Kentucky. May explore these areas more for my next purchase but these are also good areas for duplexes (and SFR) for under $100k

    0Reply
  • Billy Daniel
    Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes
    4y

    I've seen several of these in Arkansas.  You're going to have to do some work though.  Little Rock and Hot Springs seem to have some every now and then.

    0Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    $150 over the mortgage will be a big flop after factoring in cap/ex, vacancy, leasing, etc. Not that many good neighborhoods with sub 100k anymore. We have Elgin/Aurora with duplexes around $200k that rent $2400 after 5-10k in updates which can be nice cashflow. 

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    4y
    Quote from @Sean Johnston:

    I am looking to invest in a duplex or triplex for under $100k. My goal is get $150/door after the mortgage. Overall I would prioritize cashflow over appreciation. Is this realist? If so in what markets?


     Nationwide, large cluster of duplex could only be found in CA,WA,CO,OH,PA and NJ.
    If you're looking for around $50k-75k per door then your choice is limited to OH and PA only.

    So there's no such thing as "best market" for duplex under 100k. You only have Ohio (and PA) pretty much. The thing is you may want to investigate the balance between supply and demand.

    2Reply
  • Rob Gifford
    Rental Property Investor · Boston, MA · Member since 2015 · 14 posts · 13 votes
    4y

    @Sean Johnston

    I would amplify the word of caution of a the other posters here. Additionally, don't forget you pretty much have to pay the same in maintenance and CapEx no matter how cheap the property. You may cut that down a bit by not having some amenities like dishwashers and washing machines, but you really can't use a percentage based calculation when you get this cheap. Even the most basic units are likely going to run your 100-200 per month/unit in combine maintenance (painting, plumbing fixes) and cap ex (savings towards kitchens, roofs, etc).

    2Reply
  • Matt Guignon
    Real Estate Agent · St. Louis, MO · Member since 2017 · 74 posts · 20 votes
    4y

    @Sean Johnston I second St. Louis, MO. Lots of cashflow and very attractive price to rent ratios. Don't hesitate to reach out if you would like to chat more about our city and best investment opportunites. 

    1Reply
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