Buying SFH in CA or MFH rental property in a different state?

Question

Hello,

Recently, I have been in a situation where I would like to purchase either a rental property (a multifamily home) in which both units would be rented out, since I would not be living in that state, or purchase a single-family home in California.

I already own a condominium in California, where I rent out rooms to service members. When I am there, I live in one of the rooms myself. If I were to purchase a multifamily home, it would likely be in the Midwest, such as Texas. If I were to purchase a single-family home, it would be in California. The multifamily home would be fully rented out because I am active duty and stationed in California. I am currently looking into multifamily homes priced under $300,000. On the other hand, I am also considering single-family homes in Murrieta, California, which are around $500,000.

Another issue I have is that the condominium I currently own has an HOA fee of $579 per month. My total mortgage payment is $3,833, bringing my total monthly housing expense to $4,412. When I have all of the rooms rented out, the property generates approximately $4,900 per month in rental income. I pay for all utilities, including electricity, water, gas, and Wi-Fi, which I estimate separately from the mortgage and HOA costs.

Recently, I have not been able to find tenants to fill the vacant rooms, so I have only been receiving rent from one tenant, totaling $1,750 per month. I purchased this property in October 2025, and I have been considering selling it.

Would it be a better investment to sell this condominium and purchase a single-family home in California instead?

Thank you in advance for your help.

James Flores · Answer

I live in CA and do flips near Fresno. I also have some flips in the mid west. I've been eyeing Ohio for some rentals (mutil fam) but I also know some local folks who are doing multi family in CA too. Personally I havent wanted to be a landlord in CA due to the laws and it's also get more expensive.

I actually have a call with a seller today, who says it will take him 20k to evict someone.

Sounds like you are house hacking, might be worth it to find a property mgnt company to help fill the rooms (if they do it per room). Since its in CA the assumption is that it will go up in value (thats why i am keeping my personal house), but the tenant laws could be a headache.

Since you just bought it, you may want to keep it so it can make some equity and use that equity for your next purchase. Just get a property mgt in that can help you reduce the vacancy.

Alyssa Marquez · Answer

Based on what you shared, I'd be cautious about selling just yet. The bigger issue seems to be the current vacancy, not necessarily that the condo is a bad investment. If the property can generate around $4,900/month when fully occupied, I'd first try to understand why rooms aren't leasing—is it pricing, marketing, seasonality, or demand?

As for your next purchase, I'd compare investments based on cash flow and long-term goals rather than location alone. A $500k single-family home in California may have stronger appreciation potential, but a sub-$300k multifamily in the Midwest could provide much better cash flow. Since you're active duty and won't be living in the Midwest, I'd also factor in professional property management.

Before selling, I'd ask:

• Is the condo likely to cash flow once fully occupied again?
• What are the selling costs and capital gains implications?
• Could the equity from selling earn a meaningfully better return elsewhere?

Unless the condo has fundamentally become a poor investment, I'd focus on stabilizing it first, then compare the expected returns of keeping it versus selling and redeploying the equity. Making the decision based on temporary vacancies alone could mean giving up a property that still performs well over the long term.

Robert Ellis · Answer

One thing I kept coming back to wasn't California versus the Midwest—it was the current condo.

What stood out is that the property seems to perform well only when every room is occupied, and right now you're experiencing exactly the type of vacancy that every long-term underwriting model has to account for. Before deciding where the next purchase should be, I'd want to understand whether the first property can consistently perform without everything going perfectly.

I've found the next acquisition usually becomes much clearer once the current portfolio is stable. Otherwise it's easy to end up solving a portfolio problem with another purchase.

Out of curiosity, if you could consistently lease the condo as a whole at market rent instead of by the room, would you still be considering selling it, or is the bigger goal to redeploy your equity into something that scales better over the next 10 years?

Adam King · Answer

Hi @Cristobal Anguiano

Based on the numbers you provided, I'd lean toward selling the condo. When fully occupied, it's barely cash flowing, and the $579/month HOA is a significant expense that isn't building equity or generating additional income.

Personally, I'd rather have my equity in a property with stronger upside. If you're active duty, don't overlook owner-occupied multifamily options. There are loan programs that allow you to buy up to a 4-unit property with very little down, and the rental income can help you qualify.

If you stay in California, I'd look for a single-family home with ADU potential or a garage conversion opportunity. Adding a second unit can dramatically improve cash flow and give you more flexibility than your current condo.

At the end of the day, I'd focus less on condo vs. house and more on which property gives you the best combination of cash flow, appreciation, and value-add opportunities.

Austin MacKay Childs · Answer

@Cristobal Anguiano - Fellow CA investor here! Personally not seeing many opportunities in Murrieta for positive cashflow. You would have to make some pretty aggressive assumptions about rents or appreciation to make that area work at current prices. This assumes you are looking for turnkey and not a fixer/flip.

Definitely more opportunity in other states! You mentioned TX specifically and there are quite a few MF deals that look good out there when I run my analysis

Dan H. · Answer

Did you do underwriting prior to purchase.

PITIH is $4412 but rent by room when fully rented out is $4900. This spread would not even cover mgmt on a rent by room (RBR) scenario. RBR has higher expenses, higher mgmt, and higher vacancy than LTR. To summarize, if you properly allocate for expenses this purchase is very negative at full occupancy and even more negative when including vacancy.

>The median around that area is $3,200

You state the median is but are you implying this is market rent for your condo unit? If so pitih $4412 would imply this is likely negative close to $2k/month when allocating for sustained expenses including mgmt and vacancies. Do you think appreciation can exceed this by enough to warrant the effort and risk. I think it is unlikely.

It is my belief the RE market is challenging everywhere including the Midwest. If you are asking what market s better between those 2 choices I will go with the local OO purchase but suspect there are better options,

Good luck

Erik Estrada · Answer

Have you looked into running the numbers, selling the condo in CA and buying a SFR w/ ADU& JADU in CA? Maybe even look at properties that allow you to build?

Cristobal Anguiano · Answer

@Erik Estrada I haven't ran the numbers yet but I have been thinking of keeping the condo and renting it out. The median around that area is $3,200. And for looking for a SFR, I have been trying to look at properties where it has an ADU or possibly build one

Cristobal Anguiano · Answer

@James Flores That's what I was thinking of doing. Keeping the condominium and rent it out as a whole. Then buying a SFH with an ADU buying a property and adding an ADU. The condominium already has positive equity (≈ 20k).

Buying SFH in CA or MFH rental property in a different state?

Buying SFH in CA or MFH rental property in a different state?

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