I have been researching like crazy for the possibility of investing in larger apartment buildings but seem to analyze myself back to smaller multi units and duplexes every time. The loans are better and easier for the under 4 unit buildings, The cash flow seems better, and then the inventory seems better for these as well. I also picture the target millenial population to be more interested in smaller units as well. Does anyone have any insight on this topic?
I actually find the polar opposite. It is actually easier to get financing on larger multi-family complexes and the cash flow is a lot better as well. Again you could be making that observation due to a specific area that has low cap rates but I'm not sure. I have invested in apartment complexes for years now and investing in singles or duplexes only has so much growth opportunity. Best of luck!
Go big or go home ! I'm saying this nicely, just so you remember. With big comes scale and forced appreciation is more impactful. You will want professional mgt over time.
Depending on how involved you want to be, larger multi-families also lend well to more passive roles. Also I second what David said, scale is a huge factor to consider.
I personally believe the larger multifamily is the way to go, but I believe it depends on how large. If you are comparing a 12 unit complex to 3-4plexes, I believe you are correct. If we are talking 50+ unit properties, I believe the advantages are great.
However, you can only buy so many 1-4 unit properties with conventional mortgages before you will be forced into commercial lending. Some banks already say my DTI is too high and I have too many mortgages for residential loans.
The numbers on larger multifamily appear worse because the properties you are looking at might not be good deals.
@Anthony Gayden you are correct that I have been comparing 10-15 unit buildings to duplexes and fourplexes. Getting a 50+ unit building does seem to work better but coming up with that big downpayments is tricky. I'm also not interested in things like syndications or partnering up with anyone as I wouldn't prefer to have total control of the property. Looks like for now I will stick with the 4 plex units and possibly trade up to the big apartment buildings late reply on. Thanks for or your response reply
@Account Closed I am making my niche in 4 plexs and yes the first 4 loans you can use have great low interest rates, and up to 30 yr. finance. So you you can get decent cash flow, and build wealth with your asset. I was in the pay for things as you go camp, but have discovered that by borrowing, I can soon concentrate on the commercial side, learning how to grow from 14 units to lets say 30units. I self manage now, but can see having property management in the future if I don't go under.
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