BiggerPockets

this isn't really related, but when we bought our first commercial retail. it was our first.
we opened an llc, again our first.
we took out a loan (ARM) through llc. BUT needed my husband to personally gaurantee the loan.

that was the only way the bank would even speak to us.

as for lack of experience, it was on the fly!

it was commercial unit, rehab is similar to SFH but more strict and more unknown.... steep learning curve,
but it wasn't my first RE project.

after finding the tenant, it's similar to regular landlording. the hard part is getting them in, too many 3rd party opinion needs to be weighed.

but once in they are so much easier than residential.

but lack of experience did not stop me,

talk to ppl, ask question, find experts, get to know your town hall/municipality
do all the due diligence you can bef you close!

If your financing and this is your first deal then 4 unit is about as big as you want to go, when trying to finance unless you arent personally managing. If you plan to manage you need a crash course in management before you buy a 4 unit!
Banks likes to see experience if your doing 4 units and above but I would still look at deals and run it past your banker. Explain it to your banker before you bring him a deal you would rather start on a 4 unit because the roi is just better.
A local banker might over look the lack of experience on a smaller 4 unit if the cash flow is there and your down pmt and credit are in good shape. They will definitely want to see 2 years income taxes. 20% down probably.
Just remember there is a lot more management involved in a 4 unit. You will probably be paying fort at least lights in the driveway and also have to manage coin ops in basement once every couple weeks.
You will have lawn mow and snow blow duties. Its not that big a deal on a 4 unit compared to a 24 unit. The thing is if you have a day job you will want a manager and let them do it. You will pay them somewhere between 150 and $200 a month for this activity if you decide to let them do it.
The coin ops could help defray your water bill a little if its not separated.Also regarding the buildings heating system make sure you check to make sure the numbers to pay utilities dont wreck your plans for positive cash flow. Call the utility co and check electric and gas usage to see where it will put you in your monthly expenses. On older 3 and 4 unit buildings. High utility costs on buildings can drive the price so low that you can find bargains and go green with building and have great cash flow after stabilizing units.
I have been in negotiations for almost 6 months with an owner that left town on a 4 unit and this building needs a heating overhaul at present doesn't look like much for cash flow. A new furnace and insulate building could change all of that.
My most important due diligence on older 2 to 5 unit buildings has been call to check utility costs.

Hi Robert,

I have clients all over. Some are okay with partnering and others want total control.

Rather than an 8 to 16 unit usually it works better to partner on acquiring a larger property where a full time property manager and a maintenance person is on staff. This allows the property to run with minimal oversight.

You want this to be an investment and not a job. You do not want to be fixing tenants, toilets, and termites and other issues that are minimal per hour work and take away time from your family, your business, or your career.

I think your returns on individual SFH's are much greater than any multifamily deal you can get into (quads or complexes). They're also a lot easier to manage than quads or smaller complexes (i.e the 12 to 18 units you had mentioned).

The recommendation to partner with other people and go bigger makes sense. You're giving up returns with the bigger complexes (compared to SFH anyway), but you're getting the management baked into the deal so you're truly passive.

If I were you, I would do both. Try to do the bigger complex to get yourself into a deal thats truly passive. And then do some sfh's for the returns and the fun.

One thing that people tend to leave out when comparing the different models is that, while the larger complexes are passive, they also seem like they'd be very boring to me too.

To me, the thing I love the most about investing is taking down the deal. With sfh's, I can do my 3 or so houses a year and keep myself busy and have some fun. With a large complex, once you're all in, you're kind of done for awhile where it would seem to be more like investing in a stock or something. Just that it would actually send you a check every month.

But where's the entertainment value in that? I like the checks every month. But I like the fun of taking down the deals just as much.

My suggestion would be to do both if you can afford to.

Ah. Yea. Then multifamily into some bigger complexes with partners would seem to be a good fit.

For me, my hobbies are Chicago sports teams and fantasy sports. And photography. But those just don't move me like real estate.

I could do and talk real estate all day every day. By the end of the baseball or football season, I'm burned out. And if my teams aren't in the playoffs, I rarely watch.

But even if its going to look at houses with friends who are thinking of investing, I never get tired of that.....

Nothing wrong with Multi's. I went straight into these investments because you get 3 to 4 checks and its all under one roof. I don't see the advantage of acquiring and renting SFH. Could be that my area around here lends more toward MFH rather than SFH when it comes to rentals. I manage 2 - 2fam for my mom and its seems like a pain in the butt to do the regular maintenance and inspections vs my 4 unit which is just one location and one property. Don't even get me into the insurance and taxes. The 2fam equal about the same as the 4fam in those regards. Doesn't take a mathematician to figure out which is producing more CF$$$.