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

@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.

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.

Caleb Brown · Answer

I'd get bids from contractors/handyman to start and get that done, worth to do. I think a house hack is your next best bet. I know you are focusing on ROI but you also need to look at the whole picture. House hacking is a slower way to go but works. BRRR works but way more risk, 40K is very tight. Rehabs can get expensive very quick

Trevor Knorpp · Answer

It would be worth it to finish it. I keep trying to do it myself, but I get stuck in analysis paralysis. Also there's tricky drywall things that need to be done, and I don't have a truck anymore to get doors and other things from home depot. I will probably have to pay someone to do it as I work 40-50 hours a week and don't have the skills. Not sure what is mandatory to finish though. The floors would be about 1-3k, doors 1k, windows ?. I might be able to get someone in without doing much at all. I really just need a guy to come in and give me a professional opinion + bid.

Yes I would be using hard money for the rehab. A 120k property 20% down would be 24k, so that would already take most of my savings. Live in flip sounds like an okay idea. I don't want to use my once a year owner occupied loan on something like that. Lots of options.

The main thing is that I'm looking for the option with maximum ROI.

Quadplex house hack or BRRR for maximum ROI?

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