Asking for thoughts on buying a SFH vs Duplex for 1st home

New to Real Estate · Dallas, TX · Member since 2021 · 6 posts · 3 votes

I have been looking in the market to buy a duplex as my first home purchase but it's has been hard to find a cash-flowing duplex (calculated based on what I will get after I have moved out) that's within my price range. Because of this, I am starting to consider buying a single-family home since my apartment lease is ending in about 3 months and the rents in my area will be as high as a mortgage payment on some homes. Should I pull the trigger on buying an SFH or rent for the moment and keep looking for a duplex? If I go to the SFH, what are my options? I know I can house hack with SFH but I don't like the idea of losing my privacy. Thanks in advance!

I am looking for duplexes in the following area: Dallas county, Collin county, Denton county

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Lucia Rushton

Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes

@Phyo Sone as you know, small MF are very limited in the greater DFW metroplex.

So it does depend on your finances, your risk tolerance for work on the units to get market rents and when you plan on moving out; therefore what rents are you looking at down the road ?

Competition in the SFH arena is just as tough.

As always, Best wishes

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Lucia Rushton
Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
4y
@Phyo Sone as you know, small MF are very limited in the greater DFW metroplex.
So it does depend on your finances, your risk tolerance for work on the units to get market rents and when you plan on moving out; therefore what rents are you looking at down the road ?
Competition in the SFH arena is just as tough.
As always, Best wishes
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Joshua JanusBusiness Member
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
4y
@Phyo Sone Have you connected with some local investor friendly realtors? They might have a stream of off market properties coming in that could include MFH that can cash flow. Might even be an opportunity to value add too.
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Nate Sanow
Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
4y
If no duplexes are available in your budget I am definitely of the opinion a single family purchase isn’t a bad thing. Especially if you get one with low down conventional to keep capital ready for when you can invest.
Moving out from this first single family one day, you’ll be able to rent it out. Mentally you can then approach the purchase as if it is an investment.
Bonus points for grabbing a little equity or value add by targeting items on the market for a week or two and offering a little below market or finding something that needs minor value ad cosmetic touches.
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Michael Dumler
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
4y
@Phyo Sone you can get creative when it comes to SFH house hack deals. I recommend searching for properties that have an in-law suite that can either be used for long-term or short-term AirBNB use. For your situation, I don't believe there is anything wrong with purchasing a SFH, living in the property for a year, then turning the home into a rental. That being said, if you do decide to go down that route, you need to run your numbers religiously and verify with local investors that the investment will perform. As others have mentioned, SFH can be just as hard to come by as 2-4 unit properties. Furthermore, you're tight on time given that your lease expires in 3 months. I would speak with your leasing agency ASAP to work out a month-to-month lease agreement until you find a suitable home. Hope this helps!
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Phyo Sone
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New to Real Estate · Dallas, TX · Member since 2021 · 6 posts · 3 votes
4y
Quote from @Michael Dumler:

@Phyo Sone you can get creative when it comes to SFH house hack deals. I recommend searching for properties that have an in-law suite that can either be used for long-term or short-term AirBNB use. For your situation, I don't believe there is anything wrong with purchasing a SFH, living in the property for a year, then turning the home into a rental. That being said, if you do decide to go down that route, you need to run your numbers religiously and verify with local investors that the investment will perform. As others have mentioned, SFH can be just as hard to come by as 2-4 unit properties. Furthermore, you're tight on time given that your lease expires in 3 months. I would speak with your leasing agency ASAP to work out a month-to-month lease agreement until you find a suitable home. Hope this helps!
Yes, that definitely helps! I didn’t know to negotiate the month-to-month lease so I will start exploring that option. Living a year in SFH and turning it into a rental would be my plan (if I go with SFH) but I have heard that you have to either own 30% of your home after one year or have at least 2 years rental experience to be able to turn your SFH into a rental. So in total, I will have to live in the home for at least 3 years to do this. If I am misinformed, please correct me. Thanks!
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Phyo Sone
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New to Real Estate · Dallas, TX · Member since 2021 · 6 posts · 3 votes
4y
Quote from @Joshua Janus:

@Phyo Sone Have you connected with some local investor friendly realtors? They might have a stream of off market properties coming in that could include MFH that can cash flow. Might even be an opportunity to value add too.
I have an agent. She’s awesome but I wouldn’t say she’s investor friendly. I have asked my agent to send me off market deals as well.
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Gary NelsonBusiness Member
Real Estate Agent · Branson, MO · Member since 2016 · 141 posts · 93 votes
4y
@Phyo Sone if you decide to go the SFR route, I highly recommend targeting homes with the most future resale value features and qualities in mind. Normally, it's a more cookie-cutter type home, but that ought to be a more desired higher-end rental when you're ready to step up into a larger home later down the road.
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Lucia Rushton
Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
4y
Quote from @Joshua Janus:

@Phyo Sone Have you connected with some local investor friendly realtors? They might have a stream of off market properties coming in that could include MFH that can cash flow. Might even be an opportunity to value add too.

I'm so glad you are thinking outside of the box. However, in the DFW market, most if not all off-market properties are wholesale deals which do not include an option period, inspection and are usually all cash (HML can be included). So personally, I do not suggest those for new investors, they just don't have the experience nor anyone in their corner to assist during the purchase process. Due to the clear cooperation policy with NAR, all Realtors are required to put any listings they have on the MLS within 24 hours or any marketing efforts (that includes all phone calls, texts, ads, social media postings, signs in the yard, etc). So in essence, most off-market deals are from Wholesalers and/or Sellers direct.
As always, this is just my opinion from personal experience.
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John Steffen
Real Estate Agent · Dallas/Fort Worth, TX · Member since 2019 · 78 posts · 35 votes
4y
A lot of valuable points made already. When/if searching for a SFR - ask your realtor to keep an eye out for listings with a guest house or in-law suite for sure. What may be easier is just buying a 2 story home with 2 living areas, master suite downstairs, and other beds upstairs - this gives you and the tenants that separation and comfort of living, but still under one traditional roof. Best of luck!
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