Commercial Real Estate

5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t)

Expertise: Landlording & Rental Properties
24 Articles Written
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I say this halfheartedly because of the pride held by both the single-family home investor and multifamily investor. I am going to tackle a highly contested topic on BiggerPockets: Is a single-family home a better investment than a multifamily property?

Unfortunately, I am not going to give you a yes or no answer. I am going highlight the reasons why I find multifamily investments to be superior for my investment goals, and you should always analyze an investment based on what you are trying to accomplish. My objective is to persuade you to join the “dark side” a.k.a. multifamily investing. 

5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t)

1. Economy of Scale

When I first began investing in multifamily properties, I focused on smaller units. I owned a few duplexes spread out across the city. Why did I choose this path? This seemed to be the path of least resistance, and in my mind, it was easy to achieve. It appeared to be a sound strategy for me at first, but I quickly realized that each duplex had to be maintained separately. Each property had to be landscaped, the snow plowed, the mechanicals for each property serviced, the roofs and driveway kept in good condition, etc. I came to realize that it would be very difficult for me to achieve an economy of scale by owning a vast array of units spread out across the city, especially as an out-of-town investor.

Related: How Big Should I Aim for My Very First Multifamily Purchase?

What I quickly realized when we purchased our first 25-unit complex was the economy of scale that was present. What does that mean? Since all of our units were in one location, the per-unit expenses were much less. For instance, there was one lawn to mow, one garbage bill, only a few roofs to maintain, and collecting rent was much easier. All the tenants were within walking distance of each other. No driving from one home to the next to evict a tenant. This economy of scale made it much easier for us to manage our investment.

Our goal was to build a business with real estate, and multifamily properties would allow us to scale up quickly and grow the portfolio. It would be much easier to hire a maintenance crew and managers to help run our business. At first, we employed a resident manager. But as our portfolio grew rapidly, we were able to hire full time employees to provide the services to our property.

In my opinion, it is much more difficult to achieve this economy of scale if you are purchasing one single-family home at a time. It can obviously be done, as many of the BiggerPockets members have shown, but multifamily properties are the ideal vehicle if your goal is to build a sustainable and growing business because of the ability to serve more “clients” in one location, along with achieving a higher per-square-foot rent than you can achieve in a single-family residence.

multifamily-market

2. Less Work to Buy

This second reason may seem rather obvious, but I think most investors do not take into account the expense and time it takes to acquire 25 single-family homes as opposed to one 25-unit complex. Even if you bundled several homes together, you are still looking at multiple closings, not to mention visiting all of these homes before you put in an offer. Wouldn’t it be nice to visit one property, negotiate with one owner, come to terms with that single owner, and perform one closing? This reason alone will allow you to focus on your company and grow the business, not to mention the time and expense you will save.

3. Spreading Risk Over More Units

If you own a single-family home and it goes vacant for two months, guess who will be paying the mortgage? YOU. But if you own a 6-plex and two tenants decide to vacate, you still have four rents coming in to cover the expenses. Multifamily properties allow the investor to limit their downside risk by having multiple tenants pay the expenses. Once again, the investment lends itself to the investor model, where the revenue stream will be sufficient to pay the expenses and generate cash flow at the end of the month.

4. Forced Appreciation

Single-family homes are usually purchased based on the sales approach. That is, the “comps” in the market usually drive the value of the property. What is a 3-bedroom, 2-bath selling for? The home is compared to similar properties in the market. In contrast, multifamily properties are purchased using the income approach. Click here to read how to value a multifamily property.

Now, why is this distinction so important? You have much more control in a multifamily property to “force” the appreciation of the property by driving up the net operating income (NOI). Click here to read how to force the appreciation of a multifamily property. There is no waiting for market forces to drive up the value. If you employ a sound repositioning strategy to your investment, you will be able to generate wealth in a relatively short period of time. I think this is one of the biggest and most important distinctions.

importance_analyze_investments

Related: How I Bought a Multi-Million Dollar Apartment Complex at the Age of 26

5. Less Competition

To most investors, this may not seem apparent. But as I read through the forums on most real estate websites, most of the discussions are centered on fixing and flipping and wholesaling, two strategies that focus primarily on acquiring single-family homes. This increased competition ultimately leads to margins being driven down, and profits suffer as a result. In the Northeast, there are countless investors chasing these investments.

In the multifamily space, many investors possess a limiting belief that it is difficult to buy an apartment complex, and they never enter the arena. This faulty thinking has been changing the past few years, but many investors still hesitate to explore the possibilities of jumping into multifamily properties.

My hope is to have provided enough evidence to at least have you consider the benefits of multifamily properties. If you decide to join the dark side, please leave me a comment below and let me know what persuaded you. Please include below what your preference is and why.

[Editor’s Note: We are republishing this article to help out our newer readers.]

Do you prefer single-family or multifamily investments? Why?

Let me know your thoughts with a comment!

Gino Barbaro is a father of six and the co-founder of Jake & Gino LLC, a real estate education company focused on multifamily investing. He has grown his portfolio to 674 units in three years ...
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    Ryan Moeller
    Replied almost 7 years ago
    Great story Sharon. I’m glad it worked out for you. It appears your experience and followup got you this deal. I see it all the time when inexperienced investors overbid. One thing you clearly do right is you find homes that do not have the level of competition. For instance, a property on the MLS in a market like Phoenix or San Diego will have tons of offers and many pay within 10% of retail and those numbers do not work for experienced investors, not even close. So finding the off market deals with little to no competition and a motivated seller is key and it appears you did just that on this deal. I’m curious to know more about how you find probate and other deals with little competition, can you share with everyone? Your followup was brilliant. Seller motivation often skyrockets when a deal falls through. You positioned yourself as plan B, credible and the seller probably liked you and the fact that you are an expert at the structural issues on a home that may have some sentimental value. Your followup to position yourself as Plan B and get the deal was brilliant. Well Done!
    Tom Phelan
    Replied almost 7 years ago
    Sharon, Great story and speaking of “brick houses” I have a story to tell. First let me say I thought I was a seasoned home wholesaler, fix and flipper etc. I purchased a lovely 75 year-old brick house in a great neighborhood that needed extensive work. A not so sharp son inherited the home from his mother and began major renovations but ran out of money, abandoned the house and a year later lost the house to foreclosure. I purchased the house for $115,000 and calculated at least $85,000 to finish the job. I estimated once the house was complete it would sell for $260,000 so there was a comfortable cushion. Besides the random set backs, delays, minor cost overruns etc. in 90 days the home was completed and I already had an anxious family with three young kids ready to move in. We went under contract and the house was inspected, appraised etc. and we closed. One day later the Buyers frantically called us and said the sewer was severely backing up. Yes, I could have said too bad how sad because the Buyers selected the Home Inspector who when inspecting the property did the customary “turn on the taps” and flush the toilets routine. When the family moved in used the dishwasher, clothes washer and two showers the waste water backed up I agreed to remedy the matter including having a plumber dig a six foot hole to the main sewer connection in the back of the house to determines what was wrong. That did not work so we hired a guy with a snake camera who did a check and caught of video the fact that the sewer line had fractured and part of it lifted upward at a 45 degree angle etc. Unfortunately where the break in the sewer pipe occurred was under the neighbor’s concrete garage floor and we could not get to it. Apparently the sewer line was installed before the neighbor’s house had been constructed. Bottom line, we had to run a new sewer line across the front lawn and two blocks over to the hookup point and at a cost of $45,000. Poof, there went my luscious profit. My point, if you ever work on an older house or even a new house on a sewer line and the house hasn’t been used for a while, pay the Cameraman and have him use his snake camera to conduct a complete test of the sewer line. Don’t be rely on the traditional “tap water turn on” and “toilet flush” by the Inspector. An extra $350 – $500 spent on the snake camera could save you a bundle later. I must say I cried when I turned over my profits to the contractor who fixed the problem but the family was happy and I slept well at night.
    Sharon Vornholt
    Replied almost 7 years ago
    Tom – I feel your pain. Buying an older property is a whole different ball of wax than a 35-50 year old house. I rehabbed one, and I probably wouldn’t do it again. I recommend a full home inspection for everyone unless you are an expert yourself for older homes. Structural issues can easily set you back tens of thousands of dollars on a big old house. If the inspector determines that you have knob and tube wiring, need a new panel box etc. you can figure that in and get a bid from an electrician. The same is true of the HVAC system. The roof is another area of big concern. Typical home inspectors don’t have ladders tall enough to mount those roofs, and they need to be mounted. So plan on a roofer with really big ladders. That’s another high dollar repair if multiple layers of roofing or the sheathing have to be removed. You really nailed the plumbing issue though; it is hidden from view. The normal plumbing inspection by a home inspector wouldn’t necessarily find that. They are only there a couple of hours. What my inspectors used to do was run the water continuously at all faucets for 20-25 minutes. It takes time for those leaks and backups to appear. Even then, a crushed sewer line wouldn’t necessarily shown up in that span of time; maybe, maybe not. The camera inspection can save you from some enormous repair bills. If you plan to buy the house, just figure in $1000 or so for those inspections in your offer to the seller (whatever the cost is in your area). Always make the purchase of an older home contingent on inspections. Then whatever you find and you will find something big, go back to the seller and re-negotiate. Once you have found the problems, the seller has to disclose them to other buyers going forward so they will be more willing to re-negotiate. I think that property of yours falls under the category of “lessons learned”, and we have all had those lessons. You need to allow a much bigger spread for those types of properties, because there is ALWAYS something big you discover and they always take more money than expected. Don’t forget that what you left that deal with was an impeccable reputation. I would contact those buyers and get a testimonial (they are great business building tools). Sharon
    Sharon Vornholt
    Replied almost 7 years ago
    Ryan – A year ago there was hardly any competition for probate deals here. I had a seller tell me last week that she received mail from 9 different companies. So I am working on ways to “stand out and be different” from the crowd. I have never gotten in bidding wars from MLS properties. I like the “low hanging fruit”. I am very lucky where probates are concerned. They are printed in the newspaper. That’s lucky and unlucky at the same time I guess, because they are there for everyone to market to. The other niche I love is absentee owners. I have written a number of posts here and on my blog about marketing to these two niches. Direct mail sent continuously over time works the best for them. I am actually re-doing my marketing as I type this. All the people that were working REO’s are now doing direct mail and those sorts of things. Check back with me in a few weeks, and maybe I will have something to report. Good luck. Sharon
    Sharon Hiebing
    Replied almost 7 years ago
    Hey Sharon! Just wondering how your marketing revamp is going. Maybe you’ll be writing a post soon 🙂 Seeing how the experts deal with market shifts and/or new competition is very intriguing to me, and others I imagine.
    Sharon Vornholt
    Replied almost 7 years ago
    I’m still working on all the pieces Sharon. It’s all coming together. Time will tell if the results are awesome! Thanks for checking in. Sharon
    Brandon Turner
    Replied almost 7 years ago
    Great post today Sharon! Thanks for sharing!
    Sharon Vornholt
    Replied almost 7 years ago
    Thanks Brandon. I hope you got some time off over the weekend. We appreciate all the hard work on your part that goes into keeping this blog going on a daily basis. Sharon
    Dennis
    Replied almost 7 years ago
    In my area I call these folks hopeful wholesalers, hoping to make a few bucks assigning the deal. A couple months ago in my own neighborhood a deal fell through due to a higher offer, later that week the wholesaler called me asking if I was interested in buying his contract for $5000. I told him to put everything in writhing in an email, which I then forwarded to the seller. The guy actually did me a favor as the time wasted was just enough for the facts to come to the surface. The lender is now foreclosing, the property is most likely going to be a short sale candidate. At this time I don’t think I am interested in bothering with this house.
    Sharon Vornholt
    Replied almost 7 years ago
    Dennis – I have learned over time that sometimes the best outcome is not getting the deal. Thanks for telling your story. Sharon
    Shaun
    Replied almost 7 years ago
    Dennis can you elaborate a little on your story here. To me it sounds like you lost out on a deal to a wholesaler that outbid you, this guy then asked you if you wanted to buy the deal for $5K, you had him put the terms in an email that you send to the seller. (This is where the interpretation comes in) This then pisses the seller off who gets out of the contract which costs the wholesaler his potential payday and since nobody else was willing to buy the property the seller ended up in foreclosure. I assume that there is something that isn’t coming across right for me since that doesn’t sound very good.
    Glenn Schworm
    Replied almost 7 years ago
    Good Post Sharon, We have a ton of new “wholesalers” in our market place. I get at least 2 calls a week from them. I know our team can negotiate lower than they can so we set up a referral fee for them if we close a deal. Seems like a win-win and lets them feel like they are in the game. I am still a little stunned at Tom’s sewer line! $45K is not an easy pill to swallow! We have spent upwards of $5K to satisfy similar issues, you can’t put a price on your reputation. Nicely done Tom. Thanks again Sharon.
    Sharon Vornholt
    Replied almost 7 years ago
    That was a lot of money for that sewer line. Are your “wholesalers” acting more like birddogs then? Sharon
    Glenn Schworm
    Replied almost 7 years ago
    Yes. They are all so new that they really have no experience so they can gum up the works by making a buyer think his property is more valuable than it really is. They all want my time to teach them, so I tell them they get my time by brining m solid deals. Haven’t found a deal yet through one of them (newbies), but it does help us stay in better control of the lead so they don’t scare them off, if that makes sense.
    Sharon Vornholt
    Replied almost 7 years ago
    Glenn – It sounded like they didn’t really know what they were doing. Maybe you will get a deal one of these days, and they should learn a thing or two. Sharon
    Mike
    Replied almost 7 years ago
    Been there so many times before. I feel your pain! Thanks for sharing – part of the healing process is writing about it! Mike
    Sharon Vornholt
    Replied almost 7 years ago
    Haven’t we all Mike! Sharon
    Ned Carey
    Replied almost 7 years ago
    Great story Sharron,. Just like you I am all about helping newbies get started and avoiding mistakes. But I love hearing stories about knuckleheads getting their due when they think they no it all.
    Sharon Vornholt
    Replied almost 7 years ago
    Ned – It worked out for me in this case, but it doesn’t always as you know. There is always someone out there paying too much for deals they ultimately won’t make money on. The thing that really bothers me is that those sellers think the rest of us were trying to steal their property. Sharon
    Rachel
    Replied almost 7 years ago
    Wow, what a story Sharon!! I can definitely relate being on the other side of the table. Have been on the seller side with “investors” who have tied up properties — not a good position to be in. I find most “real investors” will not tie up a property that long (including myself) as we all want to move on and get the deal going. It’s actually helped to my advantage dealing with sellers who have worked with other “investors” who have tied up their properties failing to close. Going in, they tell me exactly what they want (usually a fast closing) just wanting to move on with their lives. Guess it helped on your deal as well, thanks for sharing! 🙂
    Sharon Vornholt
    Replied almost 7 years ago
    Hi Rachel – It really does work out better sometimes. And sometimes it doesn’t. I just think some deals that don’t work out end up being the best outcome for you in the end, and you just need to move on and go “next”. I had that exact situation that you described today where the seller tells you what they want. She told me what the highest offer was that she had received. I acknowledged that I understood she was hoping for more money for the house, but it needed a lot of work. This offer was by the way from a licensed Realtor that wants to buy the house. I asked the seller what I could do to make this offer more attractive? If I were to match the price and pay the closing costs would that make it work for her? She said that it would. I told her I wanted to be sure of my numbers, and I would call her morning. It’s a process for sure. The second house that I looked at today I would really like to buy. My offer is a lot lower than they have it listed for. The Realtor let “them pick a listing price” which was about 25K over what they are actually selling in that area for AFTER the repairs and updates. Unfortunately the brother who is also the other heir still thinks it will sell for the unrealistic price. It has been on the market for over 260 days at this point. I guess time will tell. I hope your business is going well. Sharon
    Deborah
    Replied almost 7 years ago
    Wow !!! Great post Sharon. I have a lot to learn, and would like to learn from others mistakes compared to making these mistakes. Sharon what do you feel that the new investor can do better to alleviate this problem?
    Sharon Vornholt
    Replied almost 7 years ago
    Learn as much as you can Deborah, and find someone in your area to mentor you. You can find these folks at your local REIA meetings. There is a ton of information here and also on my blog and some of the other blogs. You can’t learn everything at once, and the sheer amount of information can be overwhelming. Figure out which strategy you think you want to pursue and start there. Learn about that one. If you master one thing at a time, it will be easier. Sharon
    Ned Carey
    Replied almost 7 years ago
    I add to what Sharon said: 1) Learn as much as you can up front. Real estate investing isn’t about guessing or hopping it will go up in value or be a good deal. That is speculating. RE investing is KNOWING what makes a good deal. 2) You learn by doing. You are NOT going to know it all when you are starting. You do need to know enough that you are confident in your numbers and what you are getting into. Had those investors had a properly written contract with appropriate contingencies they could have done an inspection, got their deposit back, learned the lesson, and been that much smarter on the nest deal.
    Sharon Vornholt
    Replied almost 7 years ago
    Well said Ned. Sharon
    Shaun
    Replied almost 7 years ago
    I am seeing lots of new investors that might be setting themselves up for epic failure. It blows my mind how much some of these terrible properties are going for! I am pretty conservative in my numbers and I have a fairly high minimum profit target but I see people paying like $60K more than I think a place is worth (This is with ARVs in the low to mid $200s). There is just noway that those numbers can work!
    Sharon Vornholt
    Replied almost 7 years ago
    We have the same situation here Shaun. Some people are destined to learn the hard way aren’t they? Sharon
    Shaun
    Replied almost 7 years ago
    I wish them the best of luck, but I assume that you’re right and they will just learn some very tough (and expensive) lessons. Hopefully they won’t be the ones trying to kill everyone else’s dreams since they KNOW real estate doesn’t work.
    Eve
    Replied almost 7 years ago
    Hi Sharon, Great story, I enjoyed every bit of it. Does this mean the new investor should not start with wholesaling? Without hands on experience like you have for 20 years in inspection, how would a newbie know the signs for structural problems and how much each fix up cost?
    Sharon Vornholt
    Replied almost 7 years ago
    No – I think wholesaling is the perfect place to start Eve. There are certain signs you will learn to recognize. Any crack in a foundation that you can put a “nickel” in is cause for concern, but there are a lot of other things. Just google “structural failure” or “signs of structural problems in houses” and you will get a lot of information. You will find problems in houses on fall-away lots a lot of times. You will have to get an estimate if you suspect structural problems. Even people with a lot of experience do that. Over time I have learned how much piers will cost for a house, but that took a long time. Just get bids or second opinions if you have any doubt. Sharon
    Jim C. Investor from INdiana
    Replied over 3 years ago
    Hey Gino- Since you own both SFRs and Multi’s, do you find that the tenants in the SFRs stay longer than in the multis? I too own both, and there seems to be a HUGE difference in SFR tenants vs. Multi tenants in terms of length of occupancy. Also, I find that my multis provide me with MORE headaches due to tenants not getting along, noise issues, and the list goes on. What is your take?
    John Barnette Investor from San Francisco, California
    Replied over 3 years ago
    Exactly Jim Carson. I agree with every point in the article. However I too have found much more turnover, much more tenant maintenance, and more headaches (or at least different headaches) than SFR or even condo investing. In terms of forced appreciation. Yes from a numbers only perspective that makes sense. If you can raise rents and/or reduce costs and keep the units full. You can force appreciation in SFR and even condo as well if you implement a BRRR strategy and buy fixers at a discount and then fix up to rent and not flip. I also think you will see higher rent appreciation in SFR rental than apartment rental. Though likely market dependent. SFR you can have tremendous appreciation due to market appreciation and comping to other similar houses. Or buying a fixer, rent it out a bit…later get tenants out and freshen it up and sell it retail to an owner occupier in a hot market. You are not “forcing” the appreciation as much as strategically buying the right kind of rental home assets and exiting at a strong market cycle. An owner occupier will pay a premium over investor. Also financing for up to 10 individual 1-4 unit properties is lower cost than commercial apartment financing. The ease of financing can go either way though depending on circumstances. Do a mix of both. Some cash flow multi’s in cash flow markets and some strategically bought SFR’s in traditional appreciation markets when it is a buyer market.
    Chris Jackson Investor from Southold, NY
    Replied over 3 years ago
    I agree with this article and both Jim and John’s comments here. We have both types of assets in our portfolio. The one point I would disagree with is the competition aspect, just from a market cycle perspective. I can beat out 80% of all the flipper wholesalers HGTVers right now in the SFR game. But not in multifamily currently even with our experience and ability to close. The move right now in the MF cycle is to do both. Use your multifamily knowledge to try to mitigate all those items in the SFR game that it make it tough and time consuming to buy 10 SFRs vs a 10 unit building, but get the advantage of those item mentioned by Jim such as longer tenancy less PM work per tenant. Also with many SFRs in a portfolio and the demand for yield from MF investors out there, if you package up a well performing 10 unit SFR package you would crush the available options out there for single 10 unit buildings. You can actually get income approach forced appreciation and purchase financing options if your SFR portfolio is done right. We are getting interest from buyers in our SFR portfolio for that very reason. Gino we actually prefer MF for the very well articulated points you listed. I am also not suggesting the novice investor go out and try to make a go of SFR investing with hopes of illustrating the points I am making to have an ‘easier’ path to success to a multi unit portfolio. I strongly believe though that there is opportunity in SFR portfolio development with a multifamily lens.
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    HI Chris I wrote this article with the intention of SFH investors to consider the multifamily space and spark up an intelligent debate. I have no agenda other than to educate and portray my own personal experience. thanks for the comment Gino
    Rob B.
    Replied over 1 year ago
    Hi Gino, I am a Newbie in Which I have never purchased a 1st home let alone any other real estate. This is an area that I would like to pursue this year as I’m winding down in my career. My questions are… Is it harder to purchase a 4 plex vs a duplex and are there different tactics I need to take for the acquisition of a 4 plex? 2. I live in Washington state and would like to purchase my first property As a house hack 2,3,4 plex. I think since I haven’t got in the real estate game yet that this will be the least path of resistance to start building wealth and security, would you agree or have a different path or mind set going in to this? 3. Do I want to start an LLC for my first property/home if I’m going to keep investing after I purchase and/or do I need some sort of umbrella LLC. I’m still reading as much as I can from BP and learning but I’ve only been since last podcast 12-28-18 Thank you so much for any information and hope I don’t sound to green
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 1 year ago
    Hi Rob You have tons of questions I want you to focus on why Multifamily Continue to educate yourself If you are still serious about the niche, I would seek out a mentor/coach and get some one on one mentor ship. You have some terrific questions
    Chris Jackson Investor from Southold, NY
    Replied over 3 years ago
    Oh I know. Its a great article. Its the reason I got into multifamily years ago. Its the reason we will continue to focus on multifamily. I also tend to like hybrid models that allow an investor to be nimble which this article gave me the chance to pontificate on. 🙂
    Mark Ferguson
    Replied over 3 years ago
    Hey Gino! Nice article. I disagree with multi over sfr, but there are advantages to both. I would say you can get more diversification with SFR. Yes if you have one 6 plex verse one sfr, it hurts more to have the sfr vacant. But the 6 plex is usually much more expensive than a sfr. You can usually buy a few sfrs for samr money as one 6 plex. I have also seen meth labs or other problems shut down an entire complex, where having multiple sfrs would be much safer than all your units in one building. If the market tanks for investments, you really only have one buyer with multis, and a much smaller buyer pool. With sfrs you have owner occupants who will always need a place to live and you can sell to investors. With single families my tenants take care of the yards and pay utilities which is so nice. I think a lot depends on the market too. Where I am everyone wants investment properties and multis are way too expensive.
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    thanks Mark I am going to write an article on the disadvantages of multis this week. Be on the lookout Happy Labor Day and Congrats with the book! Gino
    Dave
    Replied over 3 years ago
    Thank you for the post. I really enjoy the site. This is one topic that I think about a lot. I have always been a single family investor and buy / hold. I am attracted to the idea of one day trading in for an apartment building or even a few smaller buildings. The main concern that I have right now is this notion of rising interest rates. People often write articles about the benefits of multifamily but I would love to see someone write about the topic of the disadvantages as well. We are sitting at the lowest interest rates in decades and as cap rates rise, values decrease. Investors are buying yield and there is evidence that rising interest rates have wiped out fortunes. I know the arguments are that there may be opportunities to raise rents but what if rents remain stable and interest rates soar? A good sensitivity analysis is important when looking at properties in the 5-10 year hold range. If the time frame is 15-20 years, I guess it becomes less of a concern. Would be very interested in different opinions!
    Nate Reed Real Estate Investor from Austin, TX
    Replied over 2 years ago
    +100 This is what everyone is concerned about now.
    Nancy E.
    Replied over 3 years ago
    Hello Gino, This is a good article, which has helped me confirm my interest to purchase a multi family unit within the next year. I will continue to educate myself on this type of investment. Thank you and keep writing.
    Mike Dymski Investor from Greenville, SC
    Replied over 3 years ago
    You can flip or BRRR the right kind of apartment complex just like a SFR and have much of the rehab completed by multifamily vendors and supervised by management companies. Your property value and net worth increase with every unit turn…it’s like a bunch of mini-flips or BRRRs in one location and within one transaction.
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    Mike, I agree with you wholeheartedly. I am trying to make the readers think big or at least outside the box. How many 7 figure refis can you do with SFH? My goal is to have my capital out of the investment, still cash flowing, non recourse and the capital moved to another deal. To me, this is true wealth creation. And it can happen very quickly with MF. I’m not saying it can’t with SFH, but one MF can set you free financially. I am going to write an article this week talking about the positives of SFH, of which there are. Gino
    Mike Dymski Investor from Greenville, SC
    Replied over 3 years ago
    Many of the BP members, with their excellent work ethics, intellect, SFR background and commitment to education, could run circles around existing apartment owners.
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    I totally and wholeheartedly agree. They just have to shed the limiting beliefs like we did and get educated in the space.
    Rachel Feser from North Hollywood, California
    Replied over 3 years ago
    Are any of you out there who buy MF able to negotiate a lower down payment percentage? If so, how do you do it? Who do you work with? Doesn’t the higher down payment required for MF (compared to that required for SFR purchases) end up really being a big drawback? Thank you!
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    It depends upon your level of education and your experience. On our last deal, we put down 15% and got one year interest only. The bigger down payment can be a drawback, but if you learn how to utilize owner financing, yo may be able to put less down Gino
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    It depends upon your level of education and your experience. On our last deal, we put down 15% and got one year interest only. The bigger down payment can be a drawback, but if you learn how to utilize owner financing, yo may be able to put less down Gino
    Rachel Feser from North Hollywood, California
    Replied over 3 years ago
    Thank you for your response, Gino! Would you recommend not buying MF unless you can get the lower downpayment? Also – I’ve asked others this before – are there specific cities you recommend buying in? With good demographics/stable renters? Thank you!
    Karl B. Rental Property Investor from Los Angeles, CA
    Replied over 3 years ago
    I think a lot of multi-family investors begin with a duplex and then move up. The duplex is like ‘training wheels’ and I started with them when I began multi-families. Of course, apartments are much easier and have a better cash flow but I can understand why newer investors would rather begin with a duplex as it’s much less intimidating to a newer investor.
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    Hey Karl, I did too. I thought they were a great way to cash flow and get a bit of appreciation. The market has escalated right now, so appreciation may be hard. But I tell a lot of students to buy a duplex, live on one side and then rent out the other. A great way to test the water and see if you like real estate. Gino
    Michael Le Syndicator from Humble, TX
    Replied over 3 years ago
    Timely article for me since I’ve been looking into this real hard recently. Thinking of signing up for the CCIM courses to get educated. Beyond going through your duplex training wheels, how did you get educated on the MFH side of things?
    Gino Barbaro Rental Property Investor from St Augustine, FL
    Replied over 3 years ago
    Hi Michael, find people who are investing in the market right now, and learn from them. Keep reading and listening to podcasts on BP. I found a coach and learned from him. It took several months but I became proficient and then I started to invest. It can be difficult to try to learn this industry on your own. That being said, people do it every day. I just think their learning curve is longer and they commit more mistakes, which can lead to quitting. Gino
    Michael Le Syndicator from Humble, TX
    Replied over 3 years ago
    Thanks, Gino. I totally agree. That’s how I got into SFR. Found some people who were doing it and latched on to them until I got comfortable to do my own. I guess I should have extrapolated that thought process to MFR. I’ll just have to find someone in MFR, which as you said aren’t as many or easy to find. At the same time I’ll continue my studies so when I meet someone they know I’m taking it seriously.
    Ralph Miller from Orland Park, Illinois
    Replied over 3 years ago
    Great, very informative article!
    Jason M. Investor from Northeast U.S.
    Replied over 2 years ago
    Hi, great article. Im currently purchasing singles, doubles, tri’s, and 4plexes in Rochester NY. It is going well and the numbers look amazing. I believe I am buying well in areas where my property manager can help me to be very successful. I understand that I will have a lot of driveways, roofs, lawns, etc… to maintain, however I will still be successful. This article makes a lot of sense and I love the idea of adding value to force appreciation.
    Jason M. Investor from Northeast U.S.
    Replied over 2 years ago
    Hi, great article. Im currently purchasing singles, doubles, tri’s, and 4plexes in Rochester NY. It is going well and the numbers look amazing. I believe I am buying well in areas where my property manager can help me to be very successful. I understand that I will have a lot of driveways, roofs, lawns, etc… to maintain, however I will still be successful. This article makes a lot of sense and I love the idea of adding value to force appreciation.
    Michael Bishop from Austin, TX
    Replied over 2 years ago
    I really enjoyed reading your article, Gino. I wrote a similar one, although mine has a bit more focus toward syndication. You can see it here: https://www.biggerpockets.com/blogs/10191/66365-8-reasons-why-apartment-syndication-is-an-appealing-investment-vehicle You had some very interesting points that I hadn’t even considered; (1) less work to buy and (2) less competition. I think a lot of investors just think multifamily is bigger than them and fear an entry barrier that simply isn’t as big as they assume.
    Mike T
    Replied about 2 years ago
    New to BP and very interested in MF investing. You mention a coach or mentor? How do you suggest one goes about finding one? I live in central NJ and am very tentative about buying multis on my own without some experienced advisors.
    David Thompson Rental Property Investor from Austin, TX
    Replied over 1 year ago
    Hi Geno Well laid out points. I would also add professional on site property management especially as you get into larger apartments is a great advantage. It more easily fits into the economics of affordability vs SFR where professional management can often not make economic sense. This frees you up to be more of an asset manager focusing more on strategy vs tactical and enable you time to focus on more acquisitions.
    Daniel Letts
    Replied over 1 year ago
    I am new to BP and have experience in building MF properties . I am interested in restarting investing . How hard are MF properties to locate out of area (state). Am in California and also find it hard to locate properties that have a good ROI in mid state area .
    Branden Bufford
    Replied about 1 year ago
    I’m heavily considering this. My wife finishes business school in 2020 and we want to be in an owner occupant unit for 2 years to live under our means, pay down debt, and also make money at the same time. It’s a short term sacrifice for a great long term return. I’m sure HELOCs are bigger on multifamilies and can allow for just more opportunities.
    Maria Subbotina Specialist
    Replied about 1 year ago
    One more positive aspect to be mentioned is that it is much more beneficial for investors eager to grow a large portfolio, as investing in single-family property takes more time and efforts. I mean, get a 15 unit apartment building would be faster and easier than acquiring 15 different single-family homes. As a result, your investment portfolio can be?ome larger, while the efforts made are much less.
    William J. Morgan Rental Property Investor from Roanoke, Virginia
    Replied 4 months ago
    I have zero properties at this point! Iam currently looking for a duplex or townhouse for my first investment! I have read that as a veteran I can purchase a 4 plex is with my VA loan as long as I live in one unit. I have only $10,000 to put down. But I have recently seen two 8-12 plex properties in my area come on the market for sale. Is this too much for me to try to attain or iam Assuming I need much more down to make it work?