Built 2 duplexes or a single 4-plex?

Built 2 duplexes or a single 4-plex?

Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes

Looking for feedback on my next potential project.  In my area (New Orleans), property lots are narrow, and the neighborhoods were established before cars in most cases.   In the area that I am looking, the lots are 30ft wide, which makes it very difficult to provide off street parking (so on street parking is typical for the area) for anything but single family houses.

We have identified two lots next to each other and are currently pursuing purchasing them.  With these two lots, we could build one (1) duplex on each lot (two total duplex houses) or combine the lots and build one (1) fourplex on the combined lot.  We would be building similar sized units (~900 ft2, 2 bed, 1 bath per unit), but the primary difference would be the ability to provide offstreet parking for the fourplex, due lack of setbacks between the two lots.

My guess (based on my previous builds and discussions with my GC) is the my total construction costs would be similar between the two options. For what I might save on the actual structure of the fourplex, I would likely spend related to the offstreet parking.

I personally like duplexes as they feel more like a house than an apartment, where fourplexs feel a bit more like apartments. But most fourplexes around me are boring simple two story boxes that don't have any character and no outside amenities (something I would NOT replicate).

I am a long term build and hold investor, but being able to minimize my invested capital in the project is important to me. Either selection would have permanent financing at 75%LTV (to pay off the construction loan).

I'm interested in hearing feed back on this.

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Investor · Plano, TX · Member since 2016 · 38 posts · 21 votes
10y

Would you be able to charge higher rent for the fourplex, compared to similar properties, considering it came with off-street parking? That might help you decide.

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  • Laurel, MD · Member since 2016 · 50 posts · 19 votes
    10y

    I agree the quadplex with the parking is probably the is probably the better way to go, but I haven't heard anyone mention the out strategy for 2 duplexes. 

    If you have two duplex, you might be able to petition for a split in the property. This would give you the extra option to sell or lease one of the duplexes, while keeping the other.  

  • Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    10y

    @Manolo D. For me right now, I would rather built up my rental unit portfolio than flip them properties.  Finding infill lots is getting harder and more expensive around me.  Also I have a concern of trying to build three (3) houses with a total of six (6) units, which is a bit overwhelming.  For me that would mean trying to fine six tenants all at the same time.

    If I was thinking about building on spec and selling, I would likely be focusing on other areas that are zoned single family which command higher prices, and build a single family house (which sell for more $/ft2).

    @Ryan Van Fleet  One of my primary reasons for building the duplex houses is valuation and exit stragegy.  It is much easier to sell a $250-300k duplex around me than a $500 fourplex (assuming the comps could support that).  The second reason is the valuation, which is decent amount higher on a duplex than a fourplex (which most buyers do not view as a owner occupant house).  As for the comment about splitting the property, the local zoning would not allow me to build it as s townhouse or condo.  It would require major zoning changes and variances, something that are not easy to obtain in my city.

  • Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
    10y

    @Mike Wood Thanks again for letting me peek inside your mind, I never understood buy and hold investors, I guess the reasons you mentioned makes more sense now. Your second comment about spec build opened my mind as additional factors when I decide to build. For now, I'll scale my government contracting and see where it goes, might go into development in 3-5 years when land will be much more affordable. Or next market crash lol.

  • Real Estate Professional · Charleston, SC · Member since 2015 · 22 posts · 1 vote
    9y
    Mike Wood where are here builds located! I hate to stir up an old thread but what's the update on the project? Send me a message mike, I know of vacant land uptown.
  • Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    9y

    @Haardt M.  The projects are in Midcity.  We are putting the finishing touches on the first duplex now, and have just started construction on the second one.   Hope to have it ready to rent by mid next month. Since this thread, we also purchased the adjacent vacant lot to these (to the left in the photo) and plan another duplex.. 

  • Real Estate Professional · Charleston, SC · Member since 2015 · 22 posts · 1 vote
    9y
    Cool build mike! I am going to try to start my first build this year but I'm focused on central city though most of my friends prefer midcity. Were you picking your raw land off the mls or other methods?
  • Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    9y

    @Haardt M. I purchased these two lots off the MLS. I have purchased my others via auctions. Midcity is on fire right now, with crazy pricing. It is definitely the "in" place to live right now in NOLA.

    I am not a fan of central city. I realize that there is a lot of construction there, but the crime still concerns me. As a landlord, I have spoken with quite a few renters (looking at my available places) that tried living in central city, only to leave as fast as their lease would allow (so for me, that's an absolute red flag).  Even the nicest house will have trouble keeping good tenants in a bad area.

  • Investor · Bryson City, NC · Member since 2013 · 162 posts · 122 votes
    9y

    @Mike Wood

    Units look great Mike, great to see the progress and congrats on acquiring the other lot.

  • New Orleans, LA · Member since 2016 · 7 posts · 0 votes
    9y
    Mike Wood hey Mike, might be getting something in Mid City soon. Do you think I could pick your brain about the area? Congrats on your progress.
  • Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    9y

    @Robert Riess Sure thing. 

  • Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    9y

    @Kyle H.Thanks. I wish I could finish them a quick as your projects.  The one nearing completion is now at 4.5 months with another month like till completion.  Better than my last one at 7 months, but still room for improvement. 

  • Real Estate Junkie · New Orleans, LA · Member since 2008 · 274 posts · 165 votes
    9y

    I have been watching new builds go up around St Claude in a matter of weeks, not months. I wish I could figure out how they manage to put together a crew that makes it look so easy. It must be magic!!

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y

    Consider your end-game before you even start - - what will you be selling and how marketable will that be?  If properly considered before it's built, you could create TWO independent units which could be sold at different times to reduce your tax burden in any given year, eg sell one in the fall and the other in the spring of the following year.

    This would require completely independent utilities and sewer hookups, but be worth it when sold.

  • Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    9y

    @Jeff B. What you describe would require the land to be subdivided or the property to be turned into condo's, not something that is always allowed by the local zoning. Additionally, in most areas, it is not legal to build two separate houses on the same lot, they must be connected in some manner such that they are one building, as such you would most likely be building two separate houses to begin with.

  • Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    9y
    Originally posted by @Mike Wood:

    @Jeff B. What you describe would require the land to be subdivided or the property to be turned into condo's, not something that is always allowed by the local zoning. Additionally, in most areas, it is not legal to build two separate houses on the same lot, they must be connected in some manner such that they are one building, as such you would most likely be building two separate houses to begin with.

     You are correct - - and I recommend  that making that inquiry to the City for a subdivision be step one.  If it is possible, then that creates a good opportunity.  I failed on this only because of a lack of sufficient lineal footage on the street, but it sure would have been great for me.

  • New Orleans, LA · Member since 2016 · 7 posts · 0 votes
    9y
    Mike Wood thanks if you Google My name and New Orleans I'm the first attorney that pops up. Just give me a call at my direct on there whenever you're available to chat or shoot me an email with your number and I'll reach out. Hope you're ready for Mardi Gras.
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