Quadplex house hack or BRRR for maximum ROI?

Question

I am trying to choose between investing my savings of 40k into a quadplex house hack, or to recycle the money in multiple BRRR deals. I currently already have a SFH house hack.

The numbers on my current SFH house hack are: mortgage - 1400$, 3 rooms rented - 1650$, utilities - 400$, I live in basement. If I were to move out of this house hack into another quadplex house hack, I would have trouble renting out the basement that I live in because it is not fully finished. If I was able to rent out the basement for even 400$ or more I could cashflow on the entire property a good amount. The basement needs has concrete floors, poorly finished drywall with small unfinished spots, janky doors, unfinished windows covered by blinds, etc. It was cheapy converted into a living space so I could live there and rent out the nice rooms.

Moving into a quadplex, I would have to put 5% down on a 300k-400k property (my 3.5% FHA loan is already on my SFH) so about 20-25k + 10k closing costs. I wouldn't be able to pull any of my capital out as I would be able to with BRRR. Next year I would move out and get another quadplex house hack (3rd house hack). I estimate that I would cashflow about 1k a month after moving out of this quadplex into another one after living there for a year. I would probably live nearly for free or cashflow having the other 3 units rented out.

I have never done a BRRR before. I have read David Greens BRRR book, and I have a BP book on estimating rehab costs. With the same capital, I would be able to recycle the money multiple time allowing me to do multiple deals a year with the same money instead of putting everything into a quadplex house hack and having it stuck. This is definitely a higher risk move than a quadplex househack, but with a good BRRR I would generate the same equity as the quadplex househack would generate over five years. Even without a perfect BRRR I could still leave 10-15k in the deal and still do back to back deals.

I'm leaning twords taking the safer option in the quadplex househack, but I also really want to get experience rehabbing houses for my track record. Eventually I want to do deals with 100% OPM down payments (50/50 partnered deals where they bring the money and I bring the knowledge/execution/management). If I had experience rehabbing, I would have more traction in pooling investors for deals like this.

Alex Rastorgouev · Answer

Trevor, since you're asking about maximum ROI, let me actually run the numbers on both scenarios so you can compare apples to apples.

Quadplex House Hack:

- Purchase price: $350k (midpoint of your range)

- Down payment (5%): $17,500 + ~$10k closing = $27,500 total capital deployed

- While living there: you're essentially living for free or near-free (huge savings vs paying rent elsewhere)

- After moving out (~1 year): ~$1k/month cashflow = $12k/year

- Cash-on-cash ROI: $12,000 / $27,500 = ~43% annually

- Plus you're building equity and getting appreciation

BRRRR scenario:

- Purchase: $120k property, hard money at 20% down = $24k + rehab costs

- Here's where it gets tricky: rehab on a $120k property could easily run $15-30k, especially if you're hiring it out. So you're looking at $39-54k total capital before the refi

- If you nail the ARV and refi out most of your capital, your cash left in the deal might be $5-15k

- Monthly cashflow on a $120k rental in Louisville might be $200-400/month after PITI, vacancy, maintenance

- If you leave $10k in: $3,600/year cashflow = 36% CoC ROI

- The magic of BRRRR is recycling capital — but your first one will almost certainly not be a perfect refi-out

Here's what I'd actually recommend: do the quadplex house hack FIRST. Your CoC ROI is likely higher (43% vs 36%), the risk is dramatically lower, and you still have $12-15k in reserves after closing. That's critical — Caleb is right that $40k is thin for BRRRR when rehabs go sideways.

But here's the real insight: while you're living in the quadplex for that year, use that time to build your contractor network and learn to estimate rehab costs accurately. You mentioned analysis paralysis on your basement — that tells me you're not yet confident enough in scoping rehab projects, which is exactly the skill you need before doing BRRRR.

After year one, move out of the quadplex (now cashflowing $1k/month), and you'll have saved up more capital from your W2 + cashflow to fund your first BRRRR with way more confidence and a bigger cushion.

One thing that helped me get past the analysis paralysis on comparing scenarios: plug both deal structures into an ROI calculator (I use the one at calculatorica.com/finance/roi) to stress-test different purchase prices, rehab costs, and rent assumptions. Seeing how sensitive your returns are to each variable makes the decision much clearer.

You're in a great spot with $40k and a house hack already under your belt. The quadplex is the higher-ROI, lower-risk play right now, and it sets you up perfectly for BRRRR deals down the road.

Bryon Andrews · Answer

Happy to share any insight I can! I think you make some good points here. As for financing the rehab, hard money can be risky due to the high cost of the money that you are borrowing. Hard money is a solid option if you purchase the property correctly and there is room to add the value and refinance. This can be difficult if you are using a low down payment loan to purchase the property. An option here might be the FHA 203k loan. However, you would need to figure out what to do with your current single family since you already have a FHA loan on it.

Not saying that this is the best way to do it, but what I did was bought a duplex and renovated the units as they became available. I used my own cash from my wife and my W-2 jobs as well as leveraged Lowes, Menards and Home Depot credit cards. If I spent over $300, I would receive 0% interest for at least 6 months. Sometimes they did promotions for up to 24 months. Key was to make sure you paid it off in time to avoid interest. This is not for everyone, but it was very helpful to us.

As you grow, you will find other ways to purchase properties other than low down payment, owner occupied loans. Especially while you gain experience and credibility in your market. I think the owner occupied loans are a fantastic tool to get started, but are not something that are realistic to significantly scale with.

Trevor Knorpp · Answer

Great idea. I would like to do this. Are you thinking more of a full BRRR on a quadplex househack? I'm sure the numbers would be better for what I could pull back out of the property since I would only be putting 5% down. Most of the quadplexes I look at have tenets existing in them which would make this more complicated. I wouldn't be able to refinance until all of them were rehabbed I guess? I assume I would also need more saved up to cover for the rehab vacancy. Any ideas?

Bryon Andrews · Answer

@Trevor Knorpp I think if you want experience with rehab, I would househack a quad, but make sure it is a value add fourplex. This will help you in multiple ways as you grow your knowledge about rehabs. It will also give you credibility when you go to lenders and partners if you decide to do more BRRRR investing.

Drew Sygit · Answer

Have you checked local ordinances to rent out the basement?

Usually can't do so unless it has a legal egress in the sleeping area, in case of fire.

Otherwise, do the 4-plex instead of a BRRR.

Best way to do a BRRR is to work your way up to one by constantly improving your maintenance knowledge.

Otherwise, the first BRRR you do will often lead to some expensive errors.

Trevor Knorpp · Answer

Thanks for the replies Bryon. I would probably need to use hard money to rehab the property. Would this break the ability to slowly rehab the unit one by one? It seems for both a heloc and a refi-cashout I would need to be living there for about a year also. I'm thinking that I buy a quadplex that needs some lipstick rehab, wait a year, try to flip it all at once somehow, then cashout-refi or HELOC.

Another big problem is that I can't refi into another owner occupied loan. I plan to get a new quadplex every single year. If I get another owner occupied loan after a year, I would have to wait another year to get my next property. The LTV ratios on quadplex without owner occupancy are very high, and I don't think I could raise the value of one high enough to qualify for either a heloc or refi with just a lipstick flip. What do you think about this?

Bryon Andrews · Answer

It depends on how the current leases are written and your local and state landlord/tenant laws. Here in St. Paul, MN I would not be able to go in and simply kick out tenants without just cause. (Moving in to househack is a reason to non-renew a tenant though) So I would need to renovate each unit as residents move out. In other areas however, I could non-renew residents as their lease comes up and then refinance when all the units are renovated. If you are still living in the property, you could refinance into a 5% down conventional loan again, but I am unsure about the cash out requirements for that. You could also keep your current loan and simply get a HELOC to have access to some equity after you renovate the units. I would recommend getting the aHELOC while you still live in the property as the LTV requirements are typically more flexible for an owner occupied property.

Trevor Knorpp · Answer

This is a fantastic reply. Thank you for the in-depth analysis. Looks like the quadplex house hack is the way to go, but one thing we need to talk about is equity. On the both properties, the equity generated isn't calculated into the roi (not sure if this is standard practice or not). Eventually I want to be able to fund properties entirely on HELOCs and cashflow. In doing BRRRs, I can get 30k-70k equity immediately. In the quadplex it would take me years to get to the point in the loan where I have that much equity. The SFH would also appreciate faster gaining even more equity. Factoring this, would it be a better idea to go for the BRRRs?

Lets say I go with the quadplex option this year. Next year I will have 40k saved up again which will bring me to the same decision of doing either another quadplex househack, or doing brrr. Should I just continuously do quadplex househacks if the roi is better even when my money is locked into them? The end goal is really maximum leverage overtime, and the equity from SFH BRRRs is better for this I'm thinking.

Caleb Brown · Answer

Would it be worth to finish the basement and do it right? Then when you moveout you'll attract a solid renter and cashflow better. If you move out of that single family will you be able to manage it or will that be difficult? I do think going into a quad or even a duplex would be worth it. 40K is doable for a BRRR but it's not a lot if things go south on the rehab. I assume you'll be using hard money in order to do so. A second thought is moving into a fixer upper single family as a live in flip. Then you can refi or sell and do a BRRR. Slower way but works.

Quadplex house hack or BRRR for maximum ROI?

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