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Updated over 10 years ago on . Most recent reply

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18
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Mark Ostertag
  • Real Estate Investor
  • Rochester, NY
4
Votes |
18
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New Landlord - Is four-unit too much to handle?

Mark Ostertag
  • Real Estate Investor
  • Rochester, NY
Posted

Hello All,

I've considered investing in real estate for a long time, but have only recently come around to the idea of actually doing it. (I also haven't been in a position financially to do it previously, either.) That said, I've been going through a crash course of reading books, articles (many on BP), and talking to other real estate knowledgeable people I know. I haven't done any of this before, but I'm quite motivated. That said, can anyone tell me if taking on a four-unit (owner occupied) as a first purchase is a bad idea, as in too much to handle? I'd prefer not to make big mistakes when spending this kind of money. Thanks in advance! (I'm sure glad I found BP!)

Most Popular Reply

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107
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25
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Will Johnston
  • Investor
  • Washington, DC
25
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107
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Will Johnston
  • Investor
  • Washington, DC
Replied

Vacancy rate largely depends on your location. Here in DC a well priced unit goes within hours and a moderately priced one can be rented in a couple of weeks. If you're in an area where you'll have a 3 month vacancy, that's not a good place to invest.

You mentioned vacancy being less of a factor with a duplex, but in an owner occupied duplex, 1 vacancy = 0 income. In a quad, 1 vacancy = 2/3 income.

If you're living in a quad, the other 3 units should be more than covering your mortgage, meaning you should have plenty of free cash flow to build reserves quickly to cover vacancies, maintenance, and CapEx. If rent from the three occupied units doesn't cover your mortgage, it's probably a bad investment.

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