Are you struggling with a property you want to flip, but the market isn’t quite right to fix and sell it? Or maybe you have an older building where the architect designed a “unique interior” and layout. Instead of struggling on how to fix it up, or which walls to knock out, go with a fourplex!
By definition, a fourplex is a property that contains four separate living spaces. It can be a house, an apartment building or any type of structure as long as there are four unique quarters where people can live separately.
Fourplexes provide tenants with affordable and desirable living spaces, and landlords a creative way to make more money off of a single rental property.
They’re attractive to young couples and singles because these types of renters can live in a home with a yard for less money than buying their own houses, not to mention they can live in a house without roommates. But the benefits mostly lie with the real estate investor.
Flexibility is one of the key benefits of a fourplex for a real estate investor. Specifically when it comes to leases and pricing.
You can list some units as short term and others as long term. The short term units are attractive for corporate housing, military and study abroad students. Long term leases are perfect for professionals, young couples and singles that aren’t ready to buy. Because it is four separate units, you don’t have to worry about renting the entire home to have money coming in. You can have a steady cash flow from the long term rental agreements and large bursts of revenue from the short term leases.
If you are a real estate investor and do not have a large staff, fourplexes have another advantage for you. Upkeep on a fourplex is less time consuming because there is less travel in between properties. You can also complete all inspections in one swoop instead of multiple days at multiple properties. Not to mention the peace of mind with not having to worry about one roof, HVAC system, plumbing, lawns, etc. instead of multiple buildings.
You can also get creative with pricing and make more money with a fourplex than you can when renting the entire home to a single tenant.
For example, the rental price for a single family home in your market could be $1,300 per month. The cost per single bedroom apartment could be $450 and a studio $300. By having the same house as a fourplex you now have the ability to charge $1,650 per month if you charge market rate for each.
If there is parking, you can also charge per space vs. including parking spots it if the building was a standard home rental. By adding the parking spaces in as separate rentals, you could be earning $1,800 per month if you charged $75 per space when compared to the market rate of $1,300 for a single tenant home rental.
Now remember, not all units in the building will be as desirable. Not everyone will be happy walking up one or two flights of stairs. Basements don’t always have as many windows making them not as appealing for a renter. By knowing this you can get creative.
In the same market prices mention above, why not charge $300 for the basement, $400 for the second floor unit and $550 per month for the two more desirable rental units. [Read more…]