Two SFR or one duplex?

Question

Would you rather have a duplex or two single family properties next to each other? Either option would be new construction and the duplex units would be substantially similar to the single family homes in size and features.

James York · Answer

@Jaron Walling I’m building 4 SFR for rentals right now. I’ve created a model to control costs and it’s pretty efficient. The duplex would be pretty similar on cost/SF as compared to the single family. At least in my case, it’s apples to apples on cost (savings in one area equals similar cost somewhere else). I’m most interested in opinions on what people would rather have and why.

Jaron Walling · Answer

@James York Hey good for you man! That sounds pretty interesting if you can make it work. I would take the SFH every time over a duplex. I would never choose to live opposite the wall of my neighbor over having my own yard! Depending on your target buyer I'd think the SFH has greater resale value.

Jaron Walling · Answer

@James York The answer to this question is complex and market dependent. The bigger issue here is COST. What will it cost to build the duplex vs. the SFHs? What type of construction is going on in the neighborhood? Either way new construction for rental property is generally a losing strategy because the cost to remodel old property (without major issues) is significantly less. This increases the ROI and helps you go after the next deal. I'm sure some investors cash-flow negative every month and bank on the IRR when they sell but that's not safe in my opinion.