100k to invest. Short or long-term? Single or duplex?

Member since 2022 · 9 posts · 1 vote

Hi everyone,

been listening and reading a lot. This is my first post. I’m trying to figure out the best strategy for investing in my first rental property. I don’t want to get over my head in my first purchase. Should I buy a property to rent long or short term? Should I get a single or duplex? houses here are running $300k and up for singles and 500k and up for duplexes. Thx!

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

To start with I would recommend the duplex as a long term rental. Learn the ropes on being a landlord then jump into the STR arena.

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Quinn OlivarezBusiness Member
Real Estate Agent · Houston, TX · Member since 2021 · 115 posts · 131 votes
4y
Quote from @Travis Walker:

Hi everyone,

been listening and reading a lot. This is my first post. I’m trying to figure out the best strategy for investing in my first rental property. I don’t want to get over my head in my first purchase. Should I buy a property to rent long or short term? Should I get a single or duplex? houses here are running $300k and up for singles and 500k and up for duplexes. Thx!
There is no right answer that someone else can give you. Do the numbers matter more than proximity to your residence? Does managing tenants sound better or worse than dealing with guests? Do you want to furnish a place? Etc etc etc. Make a list of all the pros and cons that come with each strategy, as well as a cost comparison. Doing that work will help you understand which project you’ll be more comfortable with. Good luck w your journey!

[email protected]832-607-2941
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Matt PursleyPro Member
Investor · Greensboro, NC · Member since 2020 · 96 posts · 73 votes
4y
@Quinn Olivarez is right. There's no right answer we can provide. We can only help show the pros and cons of each.
So much of this depends on your market and financial goals. A duplex is 2 doors but one house. That means 1 roof, 1 hvac, 1 water main, etc. STR are doing very well, but does the area you want to invest support STR? You have to decide what you're comfortable with.
One thing a lot of people don't consider are syndications. if you love the idea of being hands on and a landlord, then maybe syndicating isn't right for you. But if you've got 100k to invest, there's always the option of putting 50k into two different syndications that cash flow over 4-5 years with the proposition of a value add investment that will grow in equity over that time. SO when you sell you potentially (there's always risk) recoup your initial investment, plus the appreciation and value add, plus the money you made from cash flow. Then you do it again.
Some syndication projects can provide very high returns. If you're unfamiliar with this and are interested in learning more you can message me directly. You're asking good questions, so keep exploring your options.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Easy one......SFH. STR.
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Jeff Langley
Member since 2021 · 167 posts · 141 votes
4y
Whatever you feel more comfortable with. If you can, take advantage of the loan products with little down such as the 10% 2nd home loan.
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Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Bruce Woodruff:

Easy one......SFH. STR.

Duplexes don’t do as well for str?
0 Reply
Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Jeff Langley:

Whatever you feel more comfortable with. If you can, take advantage of the loan products with little down such as the 10% 2nd home loan.

0 Reply
Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Jeff Langley:

Whatever you feel more comfortable with. If you can, take advantage of the loan products with little down such as the 10% 2nd home loan.
Where do I find this loan product? Sounds amazing!
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
4y
Quote from @Travis Walker:

Quote from @Bruce Woodruff:

Easy one......SFH. STR.

Duplexes don’t do as well for str?

They can, sure, but with $100k for starter money, I'd go get a fixer and pump in some of your cash for the renovation....
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
4y
To start with I would recommend the duplex as a long term rental. Learn the ropes on being a landlord then jump into the STR arena.
5 Reply
Gerald Pitts
Lender · Asheville NC · Member since 2016 · 469 posts · 317 votes
4y
I personally prefer STR. The cash flow is much superior to ltr. No tenants, just temporary guests. Just make sure you're buying in a market that supports STRs.
2 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
4y
People are going to be biased by what they do. What do you want to do? A short term rental requires a lot more work than a long term rental. If it was me, I'd do a duplex (make sure each unit is on its own meter) and long term rental.
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Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Gerald Pitts:

I personally prefer STR. The cash flow is much superior to ltr. No tenants, just temporary guests. Just make sure you're buying in a market that supports STRs.

For your first property how much would you invest of your 100k nest egg?
0 Reply
Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 917 posts · 266 votes
4y
Quote from @Jeff Langley:

Whatever you feel more comfortable with. If you can, take advantage of the loan products with little down such as the 10% 2nd home loan.

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Todd Goedeke
Contractor · Sheboygan, WI · Member since 2016 · 917 posts · 266 votes
4y
Do you want to be a passive investor? If yes, build a STVR duplex for 450k or less in a vacation area in FL. You should be able to earn at least 20%+ annual ROI in cash flow by leasing your property to an experienced property manager. ( Property manager should pay for insurance ,RE taxes and furnishings)
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Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Todd Goedeke:

Do you want to be a passive investor? If yes, build a STVR duplex for 450k or less in a vacation area in FL. You should be able to earn at least 20%+ annual ROI in cash flow by leasing your property to an experienced property manager. ( Property manager should pay for insurance ,RE taxes and furnishings)
This intrigued me. Do you have experience with this model? Dm me if you can
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Todd Goedeke:

Do you want to be a passive investor? If yes, build a STVR duplex for 450k or less in a vacation area in FL. You should be able to earn at least 20%+ annual ROI in cash flow by leasing your property to an experienced property manager. ( Property manager should pay for insurance ,RE taxes and furnishings)

Property manager provides furniture? Pays your taxes and insurance? Never heard of it. What are your management fees?

@Travis Walker There are companies like the Short Term Shop that sell turnkey vacation rentals that will get a better return than a long-term investment, but you'll probably want to use a property manager to handle it for you. You can get a second-home loan with 10% down or there are other loans with 15% down. You could buy a $600,000 vacation home and get a nice start.
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Aj Parikh
Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
4y
I was also in a similar market like you where the 1% rule doesn't make sense but the properties appreciate a lot. I decided to go out of state in Cleveland, OH and purchased a SFH with a turnkey company. The numbers work better and the area has also seen a lot of appreciation since my purchase so overall a good experience. Let me know if you want to connect and chat about that.
2 Reply
Seth Young
Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes
4y
@Travis Walker It depends on how active or how much time you want to spend in the investment process! If you are looking for a truly passive investment opportunity, I would suggest looking at turnkey real estate. Also, SFH's typically generate quicker and greater appreciation, less risky and attract a better quality resident. Best of luck with all your investing!
1 Reply
Emily And Eric Erickson
Real Estate Agent · Tucson, AZ · Member since 2022 · 96 posts · 73 votes
4y
Quote from @Bruce Woodruff:

Quote from @Travis Walker:

Quote from @Bruce Woodruff:

Easy one......SFH. STR.

Duplexes don’t do as well for str?

They can, sure, but with $100k for starter money, I'd go get a fixer and pump in some of your cash for the renovation....

In general, duplexes are NOT in areas that people want to go to vacation. Usually found in mixed neighborhoods with apartment complexes and lower income areas. Not in Class A neighborhoods where STR do better in
STR is a combination of real estate and the hospitality industry. More money for more work
Keep posting questions and searching for related questions you have on BP to find the model that closest matches your preferences. There are no wrong answers in real estate, just bad fits.
2 Reply
Andre Crabb
Investor · Tampa, FL · Member since 2017 · 205 posts · 92 votes
4y
@Travis Walker what cities are you considering?
0 Reply
Christine Bellish
Investor · Garwood, NJ · Member since 2018 · 66 posts · 66 votes
4y
Totally agree with @Emily And Eric Erickson "no wrong answers, just bad fits" and absolutely echo what many others have been saying about weighing your options, considering pros and cons, and ultimately deciding what makes the most sense for you personally based on YOUR preferences and risk tolerance, which are going to be 100% unique to you. Here are some things to consider...

@Travis Walker when you say "I don't want to get in over my head" - you're smart to be cautious! No matter how much reading, research, preparation, etc you do, there's always going to be something that comes up that you couldn't plan for, but that's the nature of investing - there's always a level of risk associated with it no matter how much you due diligence you do. That being said, the best thing you can do is educate yourself about your options and do exactly what you're doing now by trying to learn from others' expertise. Have you considered maybe partnering with someone else who already has some investing experience to lower your risk by leveraging their knowledge and wisdom for your first investment?

Or like @Matt Pursley said - maybe look into investing passively in a couple syndications - that'll get you access to learn from the syndicators how they identify markets, underwrite deals, work with property management, and more. You might decide you only want to passively invest as a limited partner, or maybe you'll use your learnings to become a general partner yourself one day. If you think you may want to be a GP, you should make sure you invest with someone who will be accessible to answer you questions so you can have the best learning experience.
If you use your $100K to invest in two syndication deals that have $50K minimums, versus only using the $100K to invest in one property you are diversifying your real estate investments right off the bat, which is a major plus.
You **could** find larger return potentials if you buy a property that needs work and BRRRR it versus passively investing in a syndication, but taking on a major renovation project as your first investment project is riskier in my opinion than some of the other options discussed...higher risk higher reward is a saying for a reason :)
If you decide you'd rather buy a property personally, I would consider learning towards a long term multifamily rental over a single family or short term rental as your first investment because that helps diversify a bit (multiple units v one), and with STR you will be dealing with more frequent turnovers and furnishing the property, which can require more work unless you hire a PM to handle it like some others mentioned. Rental prices for STRs are generally higher, so potential returns could be higher, but it depends on whether you prefer the opportunity for higher returns or lower risk. Vacancy in a SFH will hurt a lot more than one vacancy in a multifamily property - if you have a duplex and at least if 1 of the two apartments is rented, some or all of your expenses will be covered, but if your single family home is vacant you have to cover all the expenses.
There are merits to all of these options, but deciding which one makes the most sense for you right now is ultimately up to you. Good luck on getting your real estate investing journey started - so exciting!!
2 Reply
Christine Bellish
Investor · Garwood, NJ · Member since 2018 · 66 posts · 66 votes
4y
@Travis Walker and I forgot to mention this as an option too, but what about house hacking? Would you consider buying a multifamily property and living in one of the units? If so, you can put down a lower down payment as an owner occupant and get better lending terms. The rent you collect for the other units can cover all or some of your living costs, and you can rinse and repeat after a year (if you buy something as an owner occupant the lender usually wants you to be there at least a year).
1 Reply
Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Andre Crabb:

@Travis Walker what cities are you considering?

FL west coast mostly at this point
0 Reply
Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
Quote from @Christine Bellish:

@Travis Walker and I forgot to mention this as an option too, but what about house hacking? Would you consider buying a multifamily property and living in one of the units? If so, you can put down a lower down payment as an owner occupant and get better lending terms. The rent you collect for the other units can cover all or some of your living costs, and you can rinse and repeat after a year (if you buy something as an owner occupant the lender usually wants you to be there at least a year).
Thank you for all the great insight! It is a lot to take in. I think if I was single or if we didn’t have kids the house hack would be perfect. I definitely wish I had learned about it earlier in my life. I just bought my 4th house recently. But I only made money on my last 2 houses I sold. The first house I bought was a disaster because I had know idea what I was doing. Similar feat since now I’m getting into investment property for the first time with $ I made selling my last house. I guess it’s just something you learn through fire like anything else but I want to be smarter
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Travis Walker
OP
Member since 2022 · 9 posts · 1 vote
4y
So I found a sfh with a pool no HOA that I will try STR and talked my dad into investing with me so it will only cost me $50,000 to get started. Hopefully I can learn the business with it for 6-9 months and then buy another after I get adept at it. So excited and nervous about jumping in. I'm entrepreneurial so I think I will enjoy STR more but we will see. I haven't closed yet but I do have questions about setting up an LLC. Can you set up your STR as an LLC while it has a mortgage?
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