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Fourplexes are properties that contain four apartment units within one building. They can be found all over the country and range greatly in cost. You may have heard that it’s a good idea to invest in a fourplex, but haven’t been told exactly why. Many benefits come with owning a multifamily property, including the fact that they provide a good source of income and usually require less hands-on management than an entire complex.
There are, however, plenty of things you should think about before purchasing a fourplex, including your budget, the property’s location and much more. You should also think about how you’ll finance your property. There are certain loans available to those looking to invest in this type of property, so it’s a good idea to heavily research these financing options.
Of course, if you are going to invest in a fourplex, you want to make sure you are using the right lender to get the job done. If you are ready to pursue financing, get started by clicking the link below to book a free strategy call with our team at LendCity today.
Fourplexes are a great source of income
One of the biggest benefits of investing in a property with four units is that they’re a great way to make money. Having multiple tenants providing you with monthly rent payments assures that you’ll have a constant flow of income—as long as you buy in an area with rental demand. The amount of the revenue generated from owning a fourplex can vary, depending on how much maintenance the property requires and any other unforeseen expenses. This is why it’s important to consider how much rent you’ll be charging your tenants when you’re analyzing the profit potential.
You don’t want to charge too much, as this may turn potential tenants away from your property, but it’s also important to make sure you’re actually making money on your investment. A good rule of thumb is to charge rent that is around one percent of what you paid for the property.
Many investors have found that investing in a fourplex is much more cost-efficient than financing a multi-family home or similar type of property. Investing in a fourplex also means that you don’t have to wait as long to save up enough money.
Another benefit of owning a one of these properties is that you’ll usually save money on property taxes. You’ll have four rental checks coming in each month, but will only have to pay the taxes on one property. That can make a significant difference in profits.
Maintenance is usually easier
Maintaining and managing a fourplex is much easier than doing the same with multiple buildings. Maintenance issues can be easily fixed as all your tenants are living within the same building. Managing your tenants and their needs will also be much easier as you won’t have to travel all over town to deal with any problems they might be experiencing.
Another advantage to maintenance is that you only have one landscape to deal with. Owning multiple properties means that you’d have to pay a landscaping professional to maintain several yards. When you own a fourplex, you might even decide to take care of the maintenance yourself, which could save even more money.
As the owner of a one of these properties, you’ll also get to decide on the lease terms for your tenants. If you’d prefer to only have short-term tenants, then you can easily create a lease for two to three months. Certain potential tenants prefer short-term leases, so it’s a good idea to research the people living in your area. For example, if you live somewhere with a high student population, then you may find short-term rentals to be a better investment.
Fourplexes can range in cost depending on many things, including where you live and the size of the property. The cost will also depend on whether you plan to construct a fourplex or buy and renovate one. Both options can be a good choice, depending on your situation. For example, if all the available fourplexes in your area need significant, expensive repairs, then you might find it easier and cheaper to have a new one constructed.
The best way to determine the price of purchasing a fourplex in your area is to do your research. You may even want to consider contacting other owners in the area to see how much they paid for their property. Many times, you can find the average cost of one of these properties by searching through listings on local real estate offices.
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Choosing the right building
Several things should be considered before you start looking at fourplexes. Your budget should be one of the biggest things you consider, as this will determine in what location you can purchase a property. Some locations in your town or city are going to be much more expensive than others, so you should decide whether saving money by buying a property in a less busy area is better than potentially making more money by purchasing a more expensive property near local hotspots.
It’s also important to decide how large of a fourplex you’d like to purchase. With more room in your fourplex, you can charge higher rent, though finding a fourplex with plenty of room might be quite difficult if you are looking within a large city.
Bring an expert to the property you are considering. This could be a trusted local contractor or a real estate professional. They can help determine the potential maintenance costs of your property as well as how much the property is worth.
Should you buy a four-unit property?
If you are a new investor looking for a lower-cost property that can make you plenty of money, then a fourplex might offer the perfect opportunity. Owning a fourplex with tenants means that you’ll have multiple sources of income coming in each month, and since all your tenants are in one location, these properties can be much easier to manage. Usually, fourplexes are also more cost-efficient when it comes to property taxes.
If you are a new investor, then it’s important to do your research in every step of the purchasing process. Though fourplexes can be quite easier to purchase and maintain than similar types of properties, they still come with several challenges that you should be prepared for.
Once again, if you are going to invest in a fourplex, you want to make sure you are using the right lender to get the job done. If you are ready to pursue financing, get started by clicking the link below to book a free strategy call with our team at LendCity today.