I am a new real estate investor researching Philadelphia to find where I want to start investing. I have been told my a lot of investors to start with a duplex rather than a single family. Do you guys think a duplex is the best way to start out?? Thanks
There are pros and cons. The nice thing about a duplex is it does provide a little diversification. If one side stops paying rent, you still have the other side to pay rent. However, you can still get this diversification with buying two properties. Just depends on personal preference in my opinion.
It really does depend. With most multis (2-4 units) you may very well get a higher turnover of tenants then you would with SFR. On the other hand with the multi you may get somewhat higher rent to price ratios and a better cash flow, at least until you start counting in the vacancy rate. In Philly I prefer the SFRs.
Let me throw one more thought into this mix.
I would suggest you start by determining your short term and long term goals for investing. Then determine how involved you want to be in your real estate business. Are you the type that wants to park your money and let it work for you (passive income) without you having to put in the daily effort. then a duplex or larger would probably be more to your liking. If you purchase right, you will generate enough cash flow to pay all the expenses (including a management company) and net some cash for yourself. If you are more hands on, then maybe a single family house that you manage yourself will more to your for you.
As a side note, if you ever consider Section 8 housing, a SFH in Philly will rent a like quicker than a multi-family unit. Simply because many Section 8 eligible tenants are families of 3 or more and are usually looking for 3 beds and up.
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