Buying 4plex as a first investment?

Question

I am looking into buying a 4plex as my first investment property. Is it a good idea or should I buy a single family house to start with? In order to have a positive cash flow, only half hour drive distance and a safe neighborhood, i need to consider multi family houses (duplex or fourplex). If I am willing to drive 1.5 hours, I can buy a single family house that will cash flow and be much cheaper. However, the vacancy rate is higher and future appreciation rate will be lower.

Joel Owens · Answer

I like 4 plexes. 1.5 hours is too far away to self manage but just my opinion..

The real question here isn't the asset type.The real question is how much money do you have to invest and what kind of returns do you want versus risk??

Whatever you purchase do not base the numbers on top market rent. You will have high turnover as people seek lower rents.With higher rents it might appear you make more but with more turnover and reconditioning the property you can lose more.

Have a great product at the bottom 50% of rents for that size and type and you will get to choose from many applicants and have  a better chance of landing a quality tenant.You can also request a higher security deposit for a better rate.

Tenants look for deals on rent also even though they are not buying a property in most cases.