If you recently read the duplex scenario, the quadruplex suite scenario is very similar. I would buy a four-family building rather than a two-family building. Again, I don’t think this scenario is as good as the room mate scenario or in-law-suite scenario, because there are fewer quads around to purchase, they’re not as easy to sell in the future if you decide to do so for some reason, and the general market of renters isn’t quite as high in quality as renters of single family homes. I think this scenario is better than the duplex scenario, however. With this option, I rent it out three of the four apartments for $1000/month, which more than covers the mortgage and maintenance. Perhaps my financial level is such that I would otherwise be paying $1000/month in rent. But now I save all that money, totaling to about $12,000/year.
At this rate, I hope to buy nine single family houses on an accelerating schedule. Purchases are in years 0, 2, 4, 6, 7, 8, 10, 11, 12, 13. This is the fastest scenario of them all, because of the estimated $12,000/year in savings coming out of saving my rent while living in the quadruplex. The income with 10 properties is about $48,000/year (like $72,000/year before tax at a rat race job). So perhaps I retire in 13 years, at age 39. Mortgages get paid off in years 30, 32, 34, 36, 37, 38, 40, 41, 42, 43. By age 66, with seven of the mortgages paid off, after tax cash flow is around a whopping $96,000/year ($144,000/year after tax in the rat race). It’s so much bigger because the 10 properties have 13 units rented. After all mortgages are paid off and I’m 69, that after tax income goes up to $108,000/year (like $162,000/year were I still in the rat race).
Those numbers get huge, and that makes the quadruplex scenario very attractive. So it comes close in my opinion to the in-law-suite scenario. The in-law-suite scenario has more flexibility, more liquidity, and is more simple. Perhaps a better idea is a mix, where the first home is with the in-law suite and I buy a quadruplex later. However, as I write this right now, I am specifically not buying any quadruplexes. This is because of the higher availability of single family homes, the much greater ease in selling them when necessary to move my investment to a better neighborhood, and the generally higher quality tenant I can get.
So let me add one more thing, about NACA and buying a house with no down payment and closing costs…
