The illiquidity of MFH

3 Replies

One thing I don't see people touting a lot is how illiquid MFH is in the commercial realm. I've looked at properties all over the US for the past two years and then some. They are all still available....Doesn't matter if they were small places for 300K or 5 million dollar sprawling places. Still there....

With a house I don't have such a problem. I can sell any individual house in my portfolio and have it under contract within days of listing, and closed within a month.

The more I look into MFH, the less appealing it is in reality. There is not a lot of room for error. If you buy a crap deal, you are stuck with it...for a long time.

You're very right. Especially if the market does crash, then who's going to be buying these things? You'd have to buy them dirt cheap to make them work! 

That is why I'm going to continue to do both single families and MFR.

If SFH or MFH was an obvious choice, people wouldn't be doing both.

There are pros and cons to both.

@Jack B. you're right that there are fewer buyers for MFH. However, you can spin that and say that there is less competition for purchasing. From there, your most important factor is good cash flow. With good cash flow, you can expect to pay off a property completely, refi out and go do it again. Refinancing on a single location that's twice as much gives you a lot more money and good economies of scale when you want that cash. There is a fine balance between volume and consolidating. It's delicate.

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