Better deal-2x $100k properties -vs-4x $50k properties ?

Question

200k

Better value for your money ?

A-2x 100k homes in- A/B class neighborhoods=$200k

vs

B-4x 50k homes in C/D neighborhoods=$200k

Lets pretend the rents are close (or the same)

What is the smarter move?  A gives you better tenants, less risk, newer home, less repairs, etc.. B gives you a tad higher rent and more diversification......

Teresa F. · Answer

Lots of variables here.  I tend to be frugal so I buy the cheaper properties.  However, I also try to buy in areas that should go up in value, e.g., the city is throwing money at the area. Jay J. is correct about the additional expenses.  Depending on your market those could be limited by purchasing a home warranty or placing some of the repair expense on the tenant.  Also, four properties allow you to leverage turnover or other expenses easier than two properties.  That said, an A/B neighborhood tends to increase in value faster than a C/D neighborhood.  You also tend to get stronger tenants in the A/B neighborhood.  I find that careful screening can address much of that concern.

Jay J. · Answer

You'd need to post more 'pretend numbers' to get a good answer to your question..

But in general, if you have 4 properties as compared to 2 properties, you'll have twice the number of roof repairs, water heaters to deal with, etc...

So, again..  post some 'real world' numbers and people will provide a good answer..