Residential income property is a tricky thing when it comes to multiple units.
When choosing an investment property in Austin, people are left with a choice between multi-family units and single family homes or Austin foreclosures. As investment specialists, we have sold plenty of both.
Choosing between a duplex, triplex or fourplex can be tricky as well. I think that if you are newer investor, you may want to start with a duplex. Tenants tend to treat a duplex more like their home because it has the feel of a home. In almost all cases, duplexes in Austin have yards. One of the good things about duplexes is that if you have one tenant move out, you aren’t loosing 100% of your income, like you would with a residential investment home in Austin.
Triplexes are usually wedged right in between a duplex and a fourplex. A little homier than a fourplex but more “commercial” than a duplex. One thing to note: there are not that many triplexes in Austin. They just weren’t built that much.
Fourplexes typically don’t have a yard and if they do, it’s very tiny. Fourplexes in Austin also have an apartment feel to them. Usually they attract a lower income tenant than apartment complexes do because they have less amenities and are therefore cheaper in most cases. Think about it. If you were looking for a place to rent, and you had to choose between a unit with just a unit and patio (4plex) or one that is the same but has a pool and weight room for $100 or $200 more, which would you choose? The key with fourplexes is when they become vacant to renovate them and renovate them FAST. I also recommend putting in higher quality finish outs that tend to be more permanent. Hard tile and stainless steel appliances tend to attract a better class of tenants and hard tile tends to last longer. Fourplexes can provide much more cash flow (especially in today’s market) but you have to be aware of the turnover (it’s higher) and be ready to pounce on that make ready as soon as the tenant moves out.
Here is an example of a renovation we did on a South Austin fourplex. We put vinyl strips of faux wood that look like hardwood down on the main living areas and new carpet in the bedroom. We painted it a darker, beige color and installed stainless steel appliances. It gave it a class, modern look and the vinyl flooring is durable. Also, if part of the flooring is damaged, it can be repaired partially without having to remove the entire floor. On the outside we caulked the siding and replaced/repaired damaged boards. This is my vision of what all investment property in Austin should look like.
