Real Estate Investing Basics

How to Transition From Single-Family to Multifamily Investing

Expertise: Commercial Real Estate, Personal Finance, Real Estate Marketing, Business Management, Landlording & Rental Properties, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing
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Over the past year, my partner and I have completely shifted from purchasing single-family rental homes to multifamily apartments. It’s a move I know many others are considering. So, what’s involved? How do you make the change successfully?

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There are many reasons residential real estate investors are looking to shift to multifamily today. Competition levels, financing, and finding value are some of them. One of the main reasons we made the switch was due to the economies of scale. It’s easier to manage one 203-unit complex versus 203 individual single-family homes. And it is more profitable.

How do you get started in multifamily property investing?

Education

The first step I took was educating myself. There are different terms and lingo in the commercial real estate sector, such as NOI, cap rate, cost segregation, etc. You want to understand these comparisons and sound educated when talking to others in the business.

I read multiple books, one being Multi-Family Millions by David Lindahl, read through forums on BiggerPockets, and watched hours and hours of material on YouTube (mostly by Grant Cardone). It also helped that my previous mentor was involved heavily in the industry. So I learned from him. There are a lot of misconceptions and myths about stepping up to multifamily investing. Get to know the truth, and it may be a lot easier than you think.

Related: 5 Ways to Jump Up to Large-Scale Multifamily Investing

Leap of Faith

There comes a moment in time when you just have to be courageous and make the purchase. There is no way to learn everything related to multi-family investing from education. The same applies to single-family investing. It’s a trap many fall into, and an excuse never to get started. Even when you think you know it all, things change. Other factors you’ll only master as you do it for real. Most of what I have learned was through actual experience and could not have been covered in a book.

Infrastructure

We laid the groundwork within our management company to be able to handle an acquisition first. We jumped from single-families straight to a 46-unit apartment complex. It only took as much work as purchasing four to five single-families. If you do not plan to self manage, then it is best to start interviewing property management companies early. Like right now; today.

Investors

We prepped our partners and investors too. We let them know in advance that we’d be shifting to multifamily. This reduced any concern, mades them feel valued, and helped to get commitments in advance. That way, when we spoke with sellers, we’d be ready to pull the trigger once we got something under contract — and wouldn’t be held back by access to capital or having the right team in place to handle the acquisition and takeover.

Related: Why the Wealthy Put Their Money Into Multifamily & Commercial Real Estate

Conclusion

There are many benefits to switching from single-family rental properties to multifamily investing today. It doesn’t have to be as hard as you think. Take the time to learn, but be ready to learn in action too. Talk to your vendors, lenders, investors, and partners, and make sure you have the team and framework to streamline the process in place. Then commit to taking the leap of faith. There are only so many tomorrows, and neither time nor the market is going to wait for you.

Once you get started you may find that multifamily investing is far easier and more profitable than you knew. Try one deal. Improve your processes, then move on to the next, and scale it.

Do you have any tips to add for making the switch to multifamily?

Share your ideas and experiences below!

Sterling is an multifamily investor specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling w...
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    Alex Hamilton Property Manager from Baton Rouge, LA
    Replied over 2 years ago
    Interesting but, my comments would be “self promoting”
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 2 years ago
    Thank you for the comment, Alex. I’d hope the process I took could help others as well that want to make the transition.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied over 2 years ago
    Great article Sterling!
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 2 years ago
    Thank you!
    John C. Investor from New York, NY
    Replied over 2 years ago
    Well done Sterling! You’ve done well for yourself in a short period of time.
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 2 years ago
    thank you for the kind words
    ShaVarr Brown Rental Property Investor from Fairburn, GA
    Replied over 2 years ago
    Great article!
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 2 years ago
    Glad you enjoyed. What was the biggest takeaway for you, Shavaar?
    Paul Moore Investor from Lynchburg, VA
    Replied over 2 years ago
    Great job, Sterling! I made the switch and I’ll never go back. Now we just need to figure out how to find deals.
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 2 years ago
    Yes indeed. How are you mostly finding your deals, Paul?
    Sujan Joshi from Tulsa, OK
    Replied over 2 years ago
    Great resource
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 2 years ago
    Glad you enjoyed. What was the biggest takeaway for you, Sujan?
    Sam Bhatti from Waukegan, Illinois
    Replied over 2 years ago
    Great article, Sterling, I agree with you 100% its all about commit to taking the leap of faith from what I’ve been learning so far. I’m just starting out as a rookie at the moment trying to learn much as possible about getting into multi family complexes. Your article is inspiring!