Why I Made the Leap From Single Family to Multifamily Real Estate Investing

Why I Made the Leap From Single Family to Multifamily Real Estate Investing

3 min read
Sterling White

Sterling White is a 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 was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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Let’s get into the reasons why real estate investors shift from single family investing to multifamily investing.

I want to start off with my story.

I started in the industry in 2009 when things were not going so well. In 2013, I was able to shift from construction to single family home investing.

I bought my very first property with no money out of pocket. I actually had negative funds in my bank account—I over-withdrew and was just not being financially smart. And my credit score wouldn’t even register when you pulled it.

I had a ton of excuses with regard to why purchasing real estate may not be possible but was fortunately able to find someone who complemented my weaknesses. So, that’s how I was able to buy my first deal—and was able to get up to 150 single families at one point!

Then, it became very management-intensive having all of those properties in Indianapolis and also Dayton, Ohio. So, I took a step back to decide: Where do I want to be long-term?

And it just made the most sense to shift to multifamily. This was in 2017.

So, these are the reasons that I believe are investors’ “whys” in terms of making the shift—and why I ultimately did. And there are several benefits to taking the leap.

Here are a few.

The Benefits of Shifting From Single Family to Multifamily Real Estate

1. Save Time

The first perk is just saving time. I was able to get up to 150 single families, and that was a lot in terms of management.

Also, when I think back about acquiring my first 46-unit apartment building, the time I spent doing that was a lot less than the time I spent on 46 single families. I certainly think I got a better ROI on time with the multifamily asset. It was one buyer, one transaction, versus with the 46 single families, it was multiple one-off deals or maybe two to three at a time. But that was a lot of transactions and volume involved with that.

Related: How to Transition From Single Family to Multifamily Investing

2. More Control

The second is more control. What I mean by more control is a lot of multifamily is driven by NOI, which is net operating income. Buyers who are coming in who are buying that asset look at it as a business. So for you as an operator, if you are able to drive that net operating income, then that directly correlates in terms of the value that you’re able to get out of that.

medium size apartment building with light gray cement exterior and lots of windows against a vibrant blue sky

With single family, a lot of the time it’s more of “this one across the street is going for this, so that’s going to be the value of my property.” ARV is heavily weighted on comparable properties in the area, as opposed to NOI.

So, there’s that on having more control.

Related: Single Family, 2-4 Unit Multifamily, or 5+ Unit Multifamily? Explore the Benefits of Each Here!

3. Economies of Scale

And the last but not least, which is by far one of my favorites, is the economies of scale.

I just recently bought 156 units. That was the largest to date. Feel great about that, but the hard work is even more to come.

But with that I have 156 units in one location and am able to have an onsite manager, as well as multiple maintenance techs. This is in stark contrast to when I had all those single families that were scattered throughout.

Back then, I had to have a maintenance guy go over there, a maintenance guy go all the way up there, and all the way throughout the city. When you just have everything in one location and then are doing that many renovations, you’re able to purchase your products in bulk, your materials—and you’re able to get a discount.

There are so many more benefits that you’re able to get when you have midsize to larger apartment buildings. It’s much more management efficient.

So, those are the reasons why I see single family investors shifting over to multifamily and why it is so much more beneficial a space to be in.

Why do you think investors are making the shift? Did you switch over to multifamily? Why or why not?

Comment below!