SFH, 2-4 units, or 5+ Multifamily - WHY do you choose one?

[J. Martin]

Me: 2-4 units (including multiple houses on 1 lot)
Location: SF Bay Area; Richmond, Oakland

Why?
1) 30yr fixed rate financing. I plan on owning the "fix and hold" properties I buy for AT LEAST a decade, and as of now, plan on retiring on them. Long-term fixed rate financing at this point in the interest rate cycle (below 5%) lets me take rent increases over the years to my bottom line, rather than sharing those increased rents with lenders over the longer-term, in the form of higher rates, when they go up

2) More concentrated than SFH, so I don't have to end up with XX properties all over the place. I'll end up with 1/2 to 1/4 of the total addresses by doing 2-4 instead of just SFH. Because I'm holding for the long term, I'm not very concerned about any lesser marketability, or specifically about any extra appreciation that comes from SFH buyer's desire to have that special home. The property should appreciate through increased rents in places with no buildable land, large differential from high and increasing housing costs nearby, close to employment centers with reasonable commute distances, and close to public transportation and freeways. MF would be even more concentrated, but the 30yr fixed rate is more important to me.

3) Less $/ft than SFH. (And more than MF). The cash flow (CF) is generally better on 2-4 units than SFH. The initial CF is better on MF than 2-4. BUT, that is just for the initial period, typically 5 years (if it's 10 years fixed, you're already looking at close to the 30yr fixed rate on 2-4 units..)

Drawbacks: Still have more addresses than MF, higher $/ft than MF, higher INITIAL rate MF, limited maximum number of 30yr fixed conforming loans you can get, higher expenses than SFH (utilities, etc), lower $/ft in rents in 2-4 compared to SFH..

This discussion is for @Chad Standish so we don't clog up the meetup posting too much. @Account Closed has SFH and condo (and looking at MF). I have 2 and 4 unit properties. Ironically, my 2 unit is 2 SFH on one lot (you can't tell. fence in between. lot just never split). I like these kinds of properties, because detached housing with private yards get a big premium here. So you get the SFH $/ft rents, with closer to the 2-4 unit $/ft price.