Loss Mitigation Specialist · Phoenix , AZ · Member since 2009 · 5 posts · 0 votes
I'd like to get some feedback on my approach to the REI game...
Right now I'm looking at getting into a few single family units because of great pricing and later look to sell those (or keep if there's enough cash flow) and get into multi family units...
My reasoning is this... right now I'm seeing homes for extremely low pricing and have yet to find 1 multi family unit that I can get into for the cost of 3 homes and I doubt very seriously that I would ever...
Should I put together a little more investment and wait for the right multi or jump on the singles while I can?
I would strongly suggest starting with a few single family houses. SFHs are much more forgiving than multis and the tenants are generally better.
I would also strongly suggest that you read about the 50% Rule in the landlording forum before you buy anything. The vast majority of new landlords fail and the number one reason they fail is that they don't understand operating expenses.
SFHs have more exit strategies, but keep in mind we are not in a seller's market. Don't buy into something without enough cash flow for you to keep long-term.
My first property was a multi unit property. I found a guy looking to get out of the rental business and bought a distressed property and fixed it up. Now it brings a 1000 a month for me.
The key is to have the numbers work. If you are just starting I also would recommend a SFH. There is no reason to jump the gun and if you dont like it or dont want it, it's exit strategy is easier than a multi family. Work your way into it. Just make sure your cost per unit works with your rental income. You can make a lot of mistakes and still get out if you buy low enough.
I have found that the numbers can be better with multi's (duplex and quadplex units), but it ALL depends on what market you are investing in.
AZ SFR's are great deals right now and buyers are coming to the table due to the affordable housing again. Makes for a good flip market.
I also agree with MikeOH that you should start small and get your feet wet first.
Several people seem to think that there's a significant difference between a SFH and a duplex. Aside from 2 tenants to contend with, and assuming all tenants are paying utilities either way, why is it so much better to do a SFH?
Several people seem to think that there's a significant difference between a SFH and a duplex. Aside from 2 tenants to contend with, and assuming all tenants are paying utilities either way, why is it so much better to do a SFH?
I don't necessarily think a SFH is better than a duplex form a numbers standpoint. In fact, I have found just the opposite. There are differences between the two. For one is financing. You usually have to put slightly more down for a duplex, but not always. I have experienced more bang for the buck buying duplex units. One land parcel and one building with two tenants gives a more cost effective purchase and higher gross rents.
The downside is you lose the ability to sell to owner occupants (for the most part), which means you are dealing with investors only. The other downside to the SFR is that when you have a vacancy, you are 100% vacant, in a duplex, you are only 50% vacant.
I received updated info and the occupancy is not what they said percentage wise, but the current income looks like it does cover the OE.
I will email you what I have.