Posted: 8/16/2025 6:03:35 PM EDT
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Curious how you evaluate rentals you buy? Cap Rate, GRM, cash flow expected etc. I've been looking at duplexes to quadplexes, and even though I will live in one unit and am willing to pay more than market rent. Its seemingly hard to get the math to math on the valuations people are expecting. |
Callsign-ChuckYeager
That man is a homo and a liar-TrojanMan
Hell, a Ford just breaks down on you. It doesn't fall apart AND try to kill you at the same time-Bloodsport2885
That man is a homo and a liar-TrojanMan
Hell, a Ford just breaks down on you. It doesn't fall apart AND try to kill you at the same time-Bloodsport2885
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I have a couple rental houses and an inherited duplex. In my area in NE Florida, new builds looked like the best way to go. New construction is more appealing but the HOAs are a bit of a pain. Our duplex in South FL was inherited but built in the 50’s. The rent was kept cheap to avoid the tenants wanting lots of upkeep. That didn’t work out so well when I inherited. The yard and trees were let go so long the trees damaged the roof. Went to repair the damage and rot and termites led to tenting and a new roof. Front unit got refreshed and is getting more rent than the back but between everything it is still breaking even with what we have put into it. The area however is up and coming. Houses in the area are being bought, knocked down and built on. A bunch are twin homes and fetch upwards of $1M. So my inherited duplex has really only grown in equity as a tear down. My new builds also grew in equity but have had much less issues. The only downside side is the rental market in my area is saturated so when my tenants leave it may take longer to find new ones, but that is a problem with the market, not the units. I guess what I am trying to say is that low cost of acquisition does not always result in higher immediate return on investment. An older fixer upper may need more cash up front to get ready to rent because any repairs, refreshes or renovations are much harder to do with a tenant. They are paying good money now but they may be out in 12 months so dealing with your repairs doesn’t give them any long term benefits to the work being done. So when looking for units I weighed cost of acquisition, cost/headache of maintenance/upkeep, and amount of rental income. We are currently researching a house in the Florida Keys as a vacation house for us and a rental when we are not there. Different mindset from 12 month rentals. |
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I don't currently own any rentals as my wife has offloaded the ones she had. But I know a lot of people that are in that market. People in the rental game like to exaggerate the profit margins. From what I've seen and people I know. The best way to do it is pay cash for a property, perhaps one that needs a little work and can be acquired for a good deal. Fix it up. Then rent it. There is a shitload of money to be made in that industry. But if you don't work in real estate or aren't versed in construction/rehabbing homes/maintenance. You're at a major disadvantage. If you don't have capital on hand your also at another major disadvantage. If I were a single dude I'd look for a 4plex. Live in 1. Rent the other 3. A big problem with 4plex (at least around here) is they are typically more ghetto and have lower tier people. I'd be looking for older people (especially single females). Even if I cut them a great deal on the rent it would be stable and them less likely to cause chaos. When it comes to profit margins. You need to be flexible. From what I've seen renting has significantly less profits/gains then investing in the stock market. Its higher risk. Etc. You really don't get stable until you have a lot of properties. And/or paid off properties. |
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Duplex to quadplex is what I am looking at. Almost all of them are negative cash flow. I've generally been giving them the benefit of the doubt and assigning my rent to at or slightly below mortgage for SFH. As soon as I move in the future bam, its negative cash flow by a few hundred bucks. Before factoring in vacancy or capex. An example, duplex priced at $4,400 mortgage/escrow. One unit is currently rented at $1,700, the other $1,200. The $1,700 unit should be more like $2,300-$2,500 based upon its size. The smaller one should rent for like $1700. |
Callsign-ChuckYeager
That man is a homo and a liar-TrojanMan
Hell, a Ford just breaks down on you. It doesn't fall apart AND try to kill you at the same time-Bloodsport2885
That man is a homo and a liar-TrojanMan
Hell, a Ford just breaks down on you. It doesn't fall apart AND try to kill you at the same time-Bloodsport2885
| I helped my kids get into a duplex under similar situations. Their first priority was to live rent free so the duplex they purchased was so the rental house paid the mortgage and maintenance, taxes etc. They then saved the money from not paying rent to buy their new duplex. They didn't have the money to consider a fourplex. I still think the math should work: one pays the mortgage the other is profit. On a fourplex there is wiggle room for the cost vs the profit. |
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