Duplex or 8-plex

6 Replies

Greetings!     I currently have one duplex and am saving for the next rental. Long term I am focused on getting passive cashflow. I like multifamily rentals, and am debating between saving the 25% down abo 15-20k for the next duplex ( 70-100k) hoping to get 300-500 cash flow a mo, rinse and repeat. Or I could save a bigger 25% down payment of about 60k  (which would take longer)for an 8-plex which would cashflow 1800-2000 a month.

   Would it be better long term to buy 4 duplexes, 2  4-plexes, or one 8-plex as my next move/moves?

Thank you in advance for your responses.

I am a proponent of starting smaller to mitigate your risk as you move forward.  You will learn a lot along the way and buying smaller properties more frequently will keep you on track.  I.e, it will be easier for you stay focused savings wise.  You can play with all the numbers you want.  Should I go with less return now or more return later?  Should I hold out and see if the market gets better? etc. etc.

I say buy a duplex as soon as you can.  The knowledge you get in time will be invaluable.

I would buy several smaller properties as the cash allows.  This will allow you to refine your skills with less financial impact when you screw up.  I jumped in and bought a four-plex with my first purchase and of course made some errors that are still costing me. 

I have since gone back to SFHs in my area which cash flow well and allow more chances to go through the process of evaluating and holding.  

Also I consider current money more valuable that future money, so getting the 200-300.mo from a duplex now and adding that to your income would be more beneficial than waiting years to save up for the 8 plex

I would hold off on buying an 8-plex until you have exhausted your conventional residential financing.  Residential financing covers up to 4 units per building.  At 8 units you will have to get commercial financing.  Requiring commercial financing makes the properties a lot less liquid.

I would look to get another duplex for the next property.  If both properties are stable, I might consider a 4-plex at that point.

Are you living in one unit or buying them fully as investment properties?

Originally posted by @Drew Adam :

Greetings!     I currently have one duplex and am saving for the next rental. Long term I am focused on getting passive cashflow. I like multifamily rentals, and am debating between saving the 25% down abo 15-20k for the next duplex ( 70-100k) hoping to get 300-500 cash flow a mo, rinse and repeat. Or I could save a bigger 25% down payment of about 60k  (which would take longer)for an 8-plex which would cashflow 1800-2000 a month.

   Would it be better long term to buy 4 duplexes, 2  4-plexes, or one 8-plex as my next move/moves?

Thank you in advance for your responses.

My first investment property was a 6-unit building (owner financed). I'm glad I didn't ask the questions you did before buying it because people may have scared me away! 

It has worked out just fine.

I just wrote a Success Story about buying a 12 unit for under $1500 out of pocket with no partners.

With $60k in cash I could add 100+ units to my portfolio.

Learn to get creative and buy 4 duplexes and the 8plex.....and more of them!

I vote duplex.

The cash flow reduces the money out of your pocket for each subsequent property eventually you would never touch your regular earnings. All future down payments come from the Real estate income.

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