Single Family or Multifamily?

Question

I know that both have their advantages and disadvantages. Would like to hear your all's opinion as I am looking to move away from single-family homes into more multifamily homes. What do you think? Additionally, what is the ideal number of units in a multifamily deal?

Julien J. · Answer

Multi-families. The more units the better.

Trevor Richardson · Answer

The both have pros and cons. But I’m general you are going to get greater efficiency with multifamily. One tax bill, sewer bill etc… and the rents should be greater $/sf than SFR. That means they will cash flow stronger. But it depends what market you are in, SFR can have greater stability (with vacancy) and can appreciate and sell quicker.

What are your goals?

Gino Barbaro · Answer

@Roy James

The big advantage with multifamily is that it is scalable, and can be managed more efficiently. I would also rather close a 10 unit, than 10 single family homes.

There is no ideal number of units. You buy what you and your partners/team can afford or qualify for.

You don't have to abandon the single family homes to move to multifamily. What I've seen happen is that once a single family home investor begins to invest in apartments, they see for themselves the massive benefits, and ultimately decide to focus solely on multifamily.

Good luck

Gino

Trevor Schmitt · Answer

Hey Roy!

What is the reason for your desire to move on from SFH and into the multifamily space? Furthermore, what strategy are you hoping to implement with your next property?

If your situation affords you the ability, performing a house hack is great opportunity in a 2–4-unit property. It is a literal cheat code IMO. If you are willing/able to live in one of the units for a year, you can get into the multifamily property for only 3.5%.

Another great advantage with that is most lenders will allow you to use 75% of the current income towards your preapproval. This can allow you to get a higher value property, with less money down.

There are certainly risks with doing this, as with everything else. But if done correctly, can really catapult you to the next level.

Joseph Hammel · Answer

Buy the ones that make the numbers. I have a lot of both. One thing not mentioned yet is SFH will have a wider market when/ if you sell.

Alecia Loveless · Answer

@Roy James I started with a SF that had a great cash flow. Then I went to multi family. I did a duplex, a 4-plex then have had 3-plex another 2 duplexes then moved to small commercial with an 8 unit and in another 10 days a 5 unit.

I like the larger multis because there is more room for profit and to cover your expenses than with the SF.

However I had an expense come up at one of the multis and refinanced the SF and was able to have the funds available. It turned out we couldn’t find anyone to do the work and ended up selling the building. I then used the refinance funds to purchase my next building which was not the original intention.

Sam McCormack · Answer

It depends, like all things do! Areas, market rents, finishes, etc. try to take a look at both options. See what is out there

Michael Blank · Answer

I'll warn you that I'm very opinionated about this topic... Single family house investing is the dumbest idea I've ever heard.I can only say that because I've done it ;) I flipped 3 dozen houses because I thought it would make me passive income. But it's active because if you're not buying, fixing and selling houses then you're not making money. Once you sell it, the money stops flowing. Yes, the BRRR method gives you cash flow, but how many houses do you need to get enough passive income to retire from? 50?  100?

With apartment buildings you can achieve financial freedom much faster. For those who are dedicated you can achieve it in as quick as one year. I've seen some people do it in as little as 6 months. I can't even count the number of SF investors who switched to MF and achieved financial independence in no time.

Roy James · Answer

I personally like the security knowing that if one person moves out, the complete cost of the mortgage will still be covered by the remaining tenants. I hope to gain more than one unit/ door at a time which is why I'm looking to get into more multifamily.

Single Family or Multifamily?

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