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Which do you prefer? SFH, Duplex, Apt, etc..

23 posts by 20 users

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Kel S

Real Estate Investor from Toledo, Ohio

Aug 08 '09, 12:17 PM


Just curious for those that are doing rentals, which is your preference? For me I think for the long term I'd prefer SFH just because I think they would be easier to sell if need be.

What about you?


Edited Jun 26 2010, 09:17


Bryan Silver

Real Estate Consultant from Seattle, Washington

Aug 08 '09, 12:34 PM


Any property that will cash flow, generate residual income; however, my preference is multifamily (apartments).


Edited Jun 26 2010, 09:17


Chris Chung

Real Estate Investor from Denver, Colorado

Aug 08 '09, 01:23 PM
1 vote


In general, I like multifamily as well. But in a relatively expensive market like the Denver Metro, sometimes duplexes are the best buy for cash flow.

The reason is that there aren't many multifamily REO's around, but there are lots of REO SFOs and duplexes.


Edited Jun 26 2010, 09:17


Rich Weese Donor

Real Estate Investor from sioux falls, South Dakota

Aug 08 '09, 08:10 PM
4 votes


They'll all work for you. However, your sfrs are always the best re-sale. It is a simple economics supply and demand lesson. Apts are never purchased by owner occupants, so you lose that demand. Duplexes are normally not bought by owner occs, so they also lose that demand.
Sfrs are bought by speculators, investors, owner occupants. They have more demand, hence more saleability, imo. They are also easier to buy. Better loans, and less money required, so more buyers. Rich.


Edited Jun 26 2010, 09:17


Michael Rossi

Real Estate Investor from Ohio

Aug 08 '09, 10:17 PM
1 vote


It's all about the money and as long as they cash flow, I don't really care.

Mike


Edited Jun 26 2010, 09:17


Ryan Johnson

Real Estate Investor from Sugar Hill, Georgia

Aug 25 '09, 02:28 PM


I would have to say multi-family homes. I am currently maxed out for being able to apply for conventional loans. Currently all of the lenders/banks that I have spoken with do not allow over 4 mortgages to be on your credit when you apply for a loan to purchase an additional property. When I bought my first property you could have up to 10 loans. If I had known that I would only be able to purchase 4 properties using loans, I would have prefered to purchase 4 quads. That way I would have 4 loans but the ability to have 16 cashflowing tenants.

The other side to that is at the time when I started buying prices were a lot higher so I couldnt afford the quadraplex units that I was finding. Now I am finding duplexes for $30k, $40k, and $50k that will rent for $750 on each side....great cashflow! The problem now is that I cant obtain conventional loans, hard money is hard to come by, and I'm having problems finding investors to partner with on buy/hold deals.


Edited Jun 26 2010, 09:29


Jim Wineinger

Real Estate Investor from ten mile, Tennessee

Aug 25 '09, 02:58 PM
2 votes


I would normally prefer SFH. But when considering the economic downturn, which may be prolonged, my thoughts are moving toward multi family homes such as duplex's, or SFH's with an garage apt for kids or parents.

This will become more common as we return to a more "extended family unit" society to make it through the hard times ahead. Where the kids move away only to return due to economic troubles. Or moving in the parents who lost their home due to troubles.

If you add kids and parents then Triplex's may also work almost as well as SFH's.


Edited Jun 26 2010, 09:29


Rich Weese Donor

Real Estate Investor from sioux falls, South Dakota

Aug 25 '09, 07:16 PM
1 vote


I like your thoughts on extended families. Why stop at the triplex? You might as well buy multis to take care of the larger extended families!
Like others, I think good deals come in all sizes, just like good people... Rich.


Edited Jun 26 2010, 09:29


Jim Wineinger

Real Estate Investor from ten mile, Tennessee

Aug 25 '09, 07:47 PM


I was speaking of the near future possibilities for newer investors, but you are absolutely correct about the long term outlook IMO.

But doing the duplex and triplex will also encourage them to do larger deals such as a complete apartment complex of say 200 units!


Edited Jun 26 2010, 09:29


Mark N.A

Real Estate Investor from North Carolina

Aug 25 '09, 08:57 PM


Interesting observation, Jawsette. I have an upstairs/downstairs 2-unit apartment totalling 5 bedrooms that has rented to extended families for the last couple of years.

Personally, I like SFHs because of the larger market of potential buyers.

Also, I'm a little wary that multis may become a target for increased taxes. It's a lot more politically palatable to hit on 'rich apartment landlords' versus the average SFH-owner.


Edited Jun 26 2010, 09:29


Paul Beauchemin

Real Estate Investor from East Aurora, New York

Aug 26 '09, 12:08 AM
3 votes


I prefer single family primarily because of the liquididty. RE already has poor liquidity and market for multi-units is much smaller then SFR.

I also believe that I can attract a higher quality tenant into a SFR, so I generally have a lower damage rate.


Edited Jun 26 2010, 09:29


Tony Tomasek

Real Estate Investor from Las Vegas, NV - LAS, Nevada

Aug 27 '09, 10:29 AM
2 votes


It is a simple matter of economics and time. If you want the liquidity SFRs are probably the best bet, but will take more work and more of you time on a per building basis in general. That is why sucessful investors eventually move at least part of their money into larger and larger buildings.


Edited Jun 26 2010, 09:31


Chris Chung

Real Estate Investor from Denver, Colorado

Aug 28 '09, 10:00 AM
1 vote


For all those who are quoting supply and demand in saying that SFR's are better investments. Consider that there are far fewer apartments/ commercial buildings than SFR -thus less supply.

SFR's have a much lower barrier of entry, so you have to protect against more competitors edging into your "turf"

Liquidity is an issue, but this is not a liquid business no matter the property type


Edited Jun 26 2010, 09:32


Jim Johnson

Real Estate Investor from Denver, Colorado

Aug 28 '09, 11:55 AM
2 votes


Originally posted by Kel S:
Just curious for those that are doing rentals, which is your preference? For me I think for the long term I'd prefer SFH just because I think they would be easier to sell if need be.

What about you?

I will choose income property every day. The more units the better. This spreads your damage across many renters. If one, two or twenty do not pay, it might reduce your monthly income, but the loan always gets paid. Income property is also valued on CAP rates, not the same as a single family that is valued tot he rest of the properties in the neighborhood. So to raise the value, I need only to increase the income or reduce the expenses. Once the CAP is applied, my increase is expectantly. The easy calculation is on a 10 CAP property, for every single dollar I increase my net operating income, the property goes up by ten dollars.
If you buy a property and say eliminate $35,000 in yearly expenses, you have increased the value by $350,000. Or, you have increased your cash flow by $35,000 yearly... either way... income property with lots of tenants is my clear choice...


Edited Jun 26 2010, 09:32 by Jim Johnson


Peter Giardini Donor

Real Estate Investor from Baltimore, Maryland

Aug 28 '09, 12:26 PM
3 votes


Ryan,

I must respond to you situation regarding being tapped out in the 'conventional" world of financing.

If you haven't already, I would recommend that you learn to deal with commerical loan officers at small local banks... once you create a relationship with these small banks you will be able to unlock funds and accelerate your business.

I have just started multi-part article on how to create these relationships with local banks. It has been posted in the Money & Finance section.

Hope this helps?

Pete


Edited Jun 26 2010, 09:32 by Peter Giardini


Jeffrey Gordon

Real Estate Investor from Boise, Idaho

Aug 28 '09, 02:03 PM


Thanks folks, that was a great discussion and i really appreciate the different perspectives. We are running into an issue with rent control where once we have 4 rental units (not buildings) we have to put everything into rent control.

I would assume that if one was rehabbing and flipping that SFR might yield a higher profit than selling a pure investment unit?

you guys keep answering a lot of questions I have been thinking about from my experiences and working through with my 27 yo son who seldom takes my advice at first glance :O.

jeffrey


Edited Jun 26 2010, 09:32


Tim W. Donor

Inspector from Tampa, FL

Aug 28 '09, 02:29 PM


For phase 1 I like SFR's. I wouldn't have bought this multi had I been as good at buying SFRs then.


Edited Jun 26 2010, 09:32


Jan Dal

Oct 16 '09, 05:24 AM


I like multi-family as I only have to go to a couple of locations and I've checked on my holdings. Also, in this economy, we're doing more of our own work to maximize our cash flow and with apartment buildings we drive to one location, not all over creation. It also seems to be easier to get property managers for multi-family. Lastly, our SFRs pay almost the same rent as each apartment does but the apartments cost less per door to acquire and are less maintenance.
As far as resale goes, I would much rather deal with an investor when reselling than deal with end-users who don't know the numbers or their financing or can't make a decision, etc. When investors are involved, the deal is much more likely to go through.


Edited Jun 26 2010, 10:06


Shaun Steckler

Foreclosure Specialist from Lafayette, Louisiana

Oct 29 '09, 04:21 AM
2 votes


If you're a serious real estate investor and you plan on growing your property portfolio, I would recommend buying all of them.

By having positions in SFH's and multi's, you diversify your risks and also expand and develop your business knowledge and experience.

Make sure you buy right and always buy more.


Edited Jun 26 2010, 10:17


Eddie Ziv

Real Estate Investor from Studio City, California

Oct 29 '09, 04:53 AM


It seems to me that the biggest problem with Multi family is selling. Although I can think of other as well. MFRs belong to a niche market. Only investors are interested in those, unless you convert your apartment building to condos (State and local laws and regulations apply).
Other problem could relate to common ground and common problem. If my SFR renter call me (Or my PM) and complains about roaches, I usually reply by saying that swear to God, I didn't put the roaches there... I also insist that the house was turned in to the renter free and clear of any infestation and if the renter keep the place clean, it will mitigate the problem. When you own a MFR, a problem like this, become a common issue where one renter may keep the place clean when another one doesn't, so the problem becomes yours.


Edited Jun 26 2010, 10:17


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