What to build? Duplex? Triplex? Quadplex?

Question

I purchased some land last year in Rock Hill, SC that I am building my personal home on, and I was also able to subdivide off 4 one acre lots. The zoning on these lots allows for SFH, Duplex, Tri, or Quad and I was thinking about building to rent. I've got a blank slate here and just looking for some guidance. I'll have city water, but I'll have to put in a septic. My initial thought is quadplexes - more doors, lower $/door to build, more rental income.

Is there anything that I'm not considering?

Tiffany DeTiege · Answer

Do you really want to live next to sixteen renters? SOMETHINGS ARE NOT WORTH THE MONEY. But I would definitely do this, If these are going to be high end units or your are going to pay a property manager. Have you considered townhouses with a single car garage. For each unit. You also want to think about value if you ever decide to sale.

Mike Wood · Answer

@Mike Morrell If you dive into the numbers, I think you will find that new construction SFR almost never make sense.  Unless your land had really high value, they will never cash flow, given todays construction costs.  I focus on duplex's as they are easier to build than 3+ units, are more home like to renters than 3+ unit, and in my area are more valuable $/ft2 than 3-4 units.  But with one acre per lot, you could likely build a nice fourplex that feels more like townhomes than crappy fourplex.  For me, it would be all about what the numbers say, but given your lot size, I would focus on either the duplex or fourplex options.

Anastassia Satchko · Answer

I would go for more units if you can. That will keep your costs down per unit. If you are interested in building a Duplex, I have a .55 cleared and grated lot in Dallas, NC available.

Mike Wood · Answer

@Shane Gordon Yes, I have built five ground up new construction duplexes, done two full gut duplexes and have another new construction duplex under construction right now.   I have looked into a new construction triplex (completed design and full construction pricing), but in the end, it made more sense to build a duplex on that lot (the lot would not allow for a fourplex).  In my area, finding infill lots that are zoned for 3+ units is incredible difficult, as well as some zoning regulations that make 3+ unit construction difficult.

Shane Gordon · Answer

@Mike Wood I came across your response to the post and was wondering if you are an actual builder for duplexes?

Mike Morrell · Answer

Well - my thought was that if I built decent homes, and charged a premium, that I would have more control - it would be easier to manage - and ideally, I'd like to get long term renters.  That last reason is why I'm leaning duplex - thinking that someone who could get into a brand new 3/2 with a garage on a 1/2 acre might like to stay a while.

Mike Morrell · Answer

I'm not planning to sell.  It is adjacent to my personal land so rather than just selling for a one time influx of cash, my thinking was long term rental income that is convenient to manage.

I'm not certain that I understand the question though - if by ARV you mean the value after built, it would be the quad.

Scott Trench · Answer

My instinct is to build for profit on the sale, not cash flow maximization. Or, a combination if you want both. What's the highest ARV relative to development cost/timeline considerations that you can get after building this? Is it 4 quadplexes?

What to build? Duplex? Triplex? Quadplex?

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