Duplex Vs. Fourplex

My situation may be a little different than most but many can possibly relate. At the time of buying our rental properties we had a business that depended heavily on our input- this is now bettering since we’ve been working on implementing business systems for the past year. And that business was in another country where we had to live in order to run it. As a result, we had little flexibility logistically. These two factors made it extremely difficult to get our duplex property rehabbed and ready for rent with the budget we had in mind. Also, I realized that I wanted to follow a criteria of what was working and avoid what was not. I realized that even though our fourplex was having a lot of problems receiving rent from the inherited tenants and going through several evictions in the process, the cash flow was still positive. The fourplex proved to be much more resilient through hard times compared to the duplex we had (a separate rental ready duplex). Both properties went through hard times as far as receive rent from tenants, and yet at the end of the day, the fourplex, having only owning it for no more than two years, was more than half paid off while with the duplex, also owning it for nearly 2 years, we were negative $3,000 plus the purchase price. I soon realized that the amount of cost and work to get the a newly bought duplex that needed full rehabbing up to speed was no longer feasible for our criteria in investing. It was time to jettison the unnecessary dead weight unpleasant from our portfolio. And so we sold it.

The duplex sold for $12,016.88. We purchased it for the sale price of $7,600 some time in the middle of 2017. It was one of our first properties and we had big expectations with plans of getting our hands dirty, create some forced appreciation, and then rent the two units out. It all made sense and we were eager to start! Nearly two years later, we realized that we had bitten off more than we can chew. By the end of this sale we had reached an expense amount of $16,561.49 not taking into account flights, hotel, and gas (difficult to determine since we have other properties to apply these expenses). With the final payment amount being $10,061.86 a check we deposited with the BofA mobile app while abroad. We sustained a loss of $6,474.63. This is the cost for the tuition of “University of Hard Knocks” There are so many things we would had done differently knowing what we know now. Had we done things differently, I believe we would had come out ahead financially in this deal. There was a lot to like about this deal, but we took the wrong direction and it got way over our heads .. But finally we were able to sell this diamond in the rough and once and for all stitch up the hole in our pocket.

Author: Luis Fernandez

Luis Fernandez is a businessperson in the hotel and software industry. When not glued to a screen, he listens attentively to his 4 years old's imagination.

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