Should I purchase 6 Multi Unit in great area versus 30+ unit bldg in not so great area with almost the same investment?
Dear BP Members,
I am looking at adding a new new multi unit property in 2015 to my portfolio, however I am confused and looking for some advice from members who own multi unit buildings and large buildings with more than 30 units.
Here is the current situation with my new purchase
Option 1 – Buy a 6 unit building in a great area with high rentals.
Option 2 – Get a 32 unit building in a not so good area (Low rental about $700 but 90% occupied – I think majority is section 8) –
I own few other multi-unit buildings (3 units) , apartments and a SFH and they are all in very good area. I don't have a property manager on these as I manage these myself in my spare time, however I do have a good handy man and a good real-estate agent.
The price of the 6 unit is close to the price of the 32 unit building ( price is because of the neighborhood), however the 32 unit building is giving about 15% return versus 8% return on the 6 unit building.
Should I persue the 6 unit building in the good neighborhood and settle for the less profit which will also come with less headache. I have never owned a 32 unit building and don’t know everything that’s involved. I also have a job and travel extensively so I would need to get a property management company to handle the 32 units. I don’t have experience and am confused, at one hand I would like to make the additional profit of 15% but I don’t know if the headache is worth it.
Your input/advice is greatly appreciated.
Thanks,
ZH.