So me and my wife started are real estate business about 3 1/2 years ago. We have 1 duplex and 13 single family homes. We are in Debt around $350,000. With Property Values if we sold all together would be a safe $1,000,000. My average rent is $1,100 a house. My question is that when i buy and rehab properties i can have most of time $30,000-$60,000 equity into homes and on top of that rent them out and cashflow $200-$500 after every expense. To me this route is not a question and better for making money then Multi Units. But whats everyones Opinion? I can see why it would be hard to really scale big to 100 houses with my wife doing payments quick books and bills and me making sure everything else is being taking care of. Lawncare, rent payments,construction, tenant turnovers and so on. I wanna really make this special and do something great. How do i scale and keep it all together and where should i go keep doing my single family home thing or try and find multi units? Which there are none around here would need to build if anything. Help would be great. Thanks BP your the best. Thankful and greatful to be where im at and mostly give credit to BP.
@Joshua D. I have been buying holding and flipping for 25 plus years. If what you are doing is working then keep it up. Forget all the noise. If your numbers are accurate and not inflated then you are kicking some butt. I own everything from a 9 unit to single families. There is money in all real estate. From low income high crime areas to the highest priced condos in New York City. If you are focused and patient and know what you are doing then why reinvent the wheel. Good luck. Sounds like you and your wife are on pace to continual profitable growth.
For me SFHs are far too high risk. One tenant one roof is not scalable. Expenses are far too high long term. You can not sustain your cash flow with a long term SFH hold scenario. Additionally property value is driven by home buyers. I prefer to be in more control wherein value is driven by income, much more professional.
Multi/apartment will hold value when residential real estate values drop. I would never choose to be at the whim of home buyers.
I would not choose to be in your position but if I were I would be liquidating and transitioning into apartment complexes now while residential market is still high.
Michael Plante i have thought about it. But there are very few around there is one 9 unit but my cashflow and equity from my single family homes is so much better. I really dont understand the thought of multi units over sfh’s in my position. But in here to listen snd learn def just starting. I feel sfh is a easier exit plan and if cashflowing ur getting best of both worlds. Im in Pa
I should have said what about selling and using the million dollars to buy other houses.
I think be cause you have fixed them up the cash flow is very little compared to the million dollar value.
I ageee I am more of a single family house person as the appreciation is much better in my opinion for the areas I buy in.
@Joshua D. I have been buying holding and flipping for 25 plus years. If what you are doing is working then keep it up. Forget all the noise. If your numbers are accurate and not inflated then you are kicking some butt. I own everything from a 9 unit to single families. There is money in all real estate. From low income high crime areas to the highest priced condos in New York City. If you are focused and patient and know what you are doing then why reinvent the wheel. Good luck. Sounds like you and your wife are on pace to continual profitable growth.
I think the answer to your question is answered in your 1st sentence.. You have only done this 3 1/2 years. What I mean by that is you most likely haven't experienced the large cap ex expense or the long term nasty eviction, Both of which will scew your figures. These things will come, just give them time.
If you have the ability to recognize management short comings and buy off of actual financials, Multi is far more powerful. Imo.
Last sfh in my porfolio should be under contract shortly. Already have the replacement 1031 multi lined up.
People here are so one tracked minded. Their way is the only way.
Ex. Everyone needs to househack a3. 5% down FHA quad.
You need to figure out what's right for you.
@Joshua D. - to scale SFH's, you'll be best off automating as much as you can. If you're looking for reasons why multi-fam is easier to scale, here are the obvious ones:
If you're going to have your wife taking care of bills, and you're handling lawncare - it's much easier if you have one property that holds 20 tenants rather than 20 properties that each hold one tenant. One lawn, one roof, one set of bills. If you are handling 14 properties now, that's 14 sets of bills, 14 exteriors to take care of, 14 roofs that might need replaced.
My opinion: the fewer properties that you own, the easier it is to manage and the lower the CapEx / expenses. This leads to better returns and less time spent managing.
If I were you, I would to a 1031 exchange with your properties - sell them, and purchase several larger multi-fams. First, you take advantage of the taxes. Second, you leverage your current equity and can expand. Third, you simplify your personal management that is needed. Fourth, you take advantage of the current housing market.
There are plenty of deals if you're willing to expand a little - McKeesport had some deals that I was looking into a few months back.
You can still expand using your current methods - it'll possibly be slower if you don't leverage, it'll require more management, and it might require help (PM company perhaps, which can cut into your profit).
@Abdul Shishi - OP asked for opinions... you can't fault people for saying what they think is the best strategy. Some people have more experience in different market types and strategies, so it's natural for them to promote those as the method that gave them success.
I would sell everything. Wait for the correction and buy a multi.
@Joshua D. first let me start by saying that if there is an investment strategy that is successful for you than trading your sweet spot for speculation isn't always the best strategy. With that said, I've always seen where 1-3 family homes easier to flip but multifamily has greater potential for cash flow. When it comes to over all expenses, having 12 individual properties opposed to 12 units (in one building) management and maintenance with potential for comparable rent is easier. Obviously acquisition of SFR's vs MF depending on what area you are in differs. I'm in the midwest and it's a bit easier to acquire houses than buildings with 6-12 units and up. Also buildings hold their value better.
Ben Wilkins has the best advice IMHO. Sometimes one gets pigeon holed into their own world and are not open minded to other opportunities. To me that is unwise. Eg... a few weeks ago I was SMH at the NYC/Cali investors on here who invest simply for appreciation because their market will not cash flow - to me that is insane yet ... I am not in their market and if it works for them great. Key IMHO in those markets is pay very very close attention to the falling knife for if you wait too long when you try to catch it will cut you very deep.
My own personal experience is as follows: been investing since I was 21 / now 58 . I have owned C properties starting out now mainly ( currently have 60+/- props and developing / building about 20-30 more by year end /another 100 over the next 2 years ) deal with A or B couple straggler C's. I have owned attached housing and SFR/ some duplexes nothing higher than a duplex. Far and away LOVE SFR the best. I have been building my SFR portfolio since 2015 and it cash flows nicely. My strategy is simple - buy them as foreclosures/ estate sales / other investors and force equity by purchasing correctly. I have about 1.65M in debt 1M in equity spread out over 31 doors. Avg rent $1140 / avg + cash flow / door+304 / avg vacancy rate since 1-1-2016 for all 60+ units is 1.09% / easier to rent-sell appreciate. The best part is 8 are fully amortized with 6 years 7 months remaining / the others are have 13/14 years remaining and yet they still cash flow very very nicely . The strategy I use is to fix them to the 9's . They are EZ to rent for higher values / little or no maintenance and best of all because they are purchased correctly after rehab I always have 20-30% equity / get my rehab money back and keep recycling my LOC ( Line of credit ) for more purchases. Last year I spent on average I spent $47 / month / unit for maintenance. We build homes / own shovel ready lots / do some farming on our lots and own rentals. Far and away if I could only do 1 thing and make enf money buying / rehabbing SFH would be my one n only. I would love to scale up to 100 - that is / now was my goal. We have moved on because opportunities have dried up and now will be building new A props in growing markets . Someone once said " if it's not broke don't fix it!" If it works for you keep working it!
My thoughts happy hunting
Ben Wilkins has the best advice IMHO. Sometimes one gets pigeon holed into their own world and are not open minded to other opportunities. To me that is unwise. Eg... a few weeks ago I was SMH at the NYC/Cali investors on here who invest simply for appreciation because their market will not cash flow - to me that is insane yet ... I am not in their market and if it works for them great. Key IMHO in those markets is pay very very close attention to the falling knife for if you wait too long when you try to catch it will cut you very deep.
My own personal experience is as follows: been investing since I was 21 / now 58 . I have owned C properties starting out now mainly ( currently have 60+/- props and developing / building about 20-30 more by year end /another 100 over the next 2 years ) deal with A or B couple straggler C's. I have owned attached housing and SFR/ some duplexes nothing higher than a duplex. Far and away LOVE SFR the best. I have been building my SFR portfolio since 2015 and it cash flows nicely. My strategy is simple - buy them as foreclosures/ estate sales / other investors and force equity by purchasing correctly. I have about 1.65M in debt 1M in equity spread out over 31 doors. Avg rent $1140 / avg + cash flow / door+304 / avg vacancy rate since 1-1-2016 for all 60+ units is 1.09% / easier to rent-sell appreciate. The best part is 8 are fully amortized with 6 years 7 months remaining / the others are have 13/14 years remaining and yet they still cash flow very very nicely . The strategy I use is to fix them to the 9's . They are EZ to rent for higher values / little or no maintenance and best of all because they are purchased correctly after rehab I always have 20-30% equity / get my rehab money back and keep recycling my LOC ( Line of credit ) for more purchases. Last year I spent on average I spent $47 / month / unit for maintenance. We build homes / own shovel ready lots / do some farming on our lots and own rentals. Far and away if I could only do 1 thing and make enf money buying / rehabbing SFH would be my one n only. I would love to scale up to 100 - that is / now was my goal. We have moved on because opportunities have dried up and now will be building new A props in growing markets . Someone once said " if it's not broke don't fix it!" If it works for you keep working it!
My thoughts happy hunting
Tha m you for your very detailed post
This is what I go back and forth on with myself
Started out 35 years ago with buy,rent hold. But a couple years ago went to flip
It looks like your 31 doors nets approx 110k a year plus appreciation which is great. And I think I should do that. But then I see I can flip just 2 houses in a year and net $140k.
Yes taxes are higher but is the worth the same or less I wonder to myself.
I know I really really enjoy the flipping even if I put more time into it. and not so much the renting
I can leave a flip for a month or two and go on vacation without a worry.
I don’t have to get loans which I REALLY don’t like.
So I just don’t know
Good thoughts - heres a couple of other thoughts to share.
1.) The 110k does not include appreciation - I believe your already aware of that benefit
2.) It is also does not take into account debt reduction which is nearing 140k
3.) Finally the tax benefits of buying / hold are quite a bit more attractive in my mind.
I absolutely agree with other posts, that no matter what you decide there is no wrong answer because whatever you do it is right for your situation.
Best wishes!