All Forum Posts by: Juhi Banerjee

I wanted to check if I have a 4 bedroom house can I rent it by room to 4 different people. What are the legalities involved for this and what is the maximum occupancy which is allowed?

I am thinking of buying a quadruplex built in 1980 and I am estimating $80 per unit per month as maintenance expense and $80 per unit per month as capex. It is relatively well maintained and owner changed the roof in 2011 and water heater in 2020. My agent send me the finance statement from the property management company who is managing the property for last full year and the maintenance expenses is way less than what I am projecting. They are estimating $1300 for quadruplex which comes to $27 per unit for maintenance expenses. The property company is managing 4 such quadruplexes built side by side. Is it possible that there are economies of scale which I am not aware of where the expense is nearly 3 times less than what I am estimating. Also, the owner is only sharing finances of single year.

Also it has only one other major employer left and depends on economy on other major tourist town which is 35-40 minutes away.

I found a quadplex with good cashflow around $800 per month after deducting all expenses. It is a good well maintained property. The issue is it is a small town with less than 15000 population. Also one of the major employers filed for bankruptcy in the 2019 with loss of around 250 jobs. The tenants are mostly middle class who work in service and hospitality industry. There is a major tourist city nearby but it is 35 mins from this town. Should I still invest here as it has good cashflow.

I liked a duplex around 30 years old with 2 and 3 bedrooms with one side renting for $1100 and other one for $1200 per month. I was about to make an offer on the property but the agent informed me that there is an big builder constructing multiple single family homes in the area just behind the duplex. The area has a high appreciation potential with good livability index. Also there is a widening of road going on to anticipate increase in traffic in front of the duplex. 

I wanted to check what effect the existing availability of homes will have on current multi-family rentals like the duplex in question. Will the rent get squeezed because lot more homes are available to own and further rent down the road.  The current duplex has only couple of hundred cashflow after taking out all the expenses including mortgage but the existing area has very good appreciation potential. Even the decrease in 10% rent can have adverse effect on cashflow.

I am also open to do a cosmetic repair where I can improve some of the stuff to compete with newer homes in the area (say granite countertops and stainless steel newer appliances). What is the risk here due to increase in competition and can a 30 year duplex compete with newer homes made by big builder?

Another question I wanted to check was the duplex is on a huge stretch of land almost totaling 1 acre. Can I sell some portion of the land to the same builder after closing the deal.

@Ben Miller are you saying we find a 1 bedroom rental unit as a comp and multiply by 2 say for duplex if we dont have any comparable duplex in the area.

I would like to know how do we appraise a duplex, triplex or quadplex? Usually for SFH we would find the similar homes in immediate neighborhood say 5 miles and adjust according to bedroom count, age of property, repairs needed etc. But we wont have similar comps for small multifamily. If I want to evaluate quadplex consisting of 8 bedroom, 4 bath should I find a similar comp for 2 bed 1 bath in the neighborhood and multiply that by 4? It feels exaggerated to evaluate the property like that. We also can't use a metric like cap rate and NOI as it is more suitable for more than 4 units.What is the best metric to evaluate such properties?