Plymouth, MA · Member since 2017 · 42 posts · 16 votes
How do small multifamily's (3-4 units) fare when located in markets that generally have a large supply of large apartment complexes, like Orlando, Dallas-Fort Worth and similar markets. I am currently in Massachusetts, but foresee moving to Florida, Texas, Arizona within the next few years, and was wondering how a small property would do in markets like those.
I'm looking at getting my first place here in Massachusetts soon, and I don't really have to compete with large complexes here.
In general, some of the areas you mentioned are hot and pools are common, so are gyms, for the extra expected facilities, larger complexes are popular.
But there are some people that do not like the large more social scenes and would prefer a smaller complex. Not as many people go for the smaller places, but not as many complexes either.
Having lived in AZ and CA in the past, the smaller multi- residential properties are not as common as in the south (where I live now) and east (where I also lived and visited a lot in the past).
Note: never lived in TX, just passed through so I know nothing for TX.
Phoenix is a hot market and booming no issue here big or small complex.
I'm struggling to find any 3-4 families there. It also seems like they dont really stack the units on top of each other like they do here in the northeast.
@Nick Mulligan That's great that you are taking action regarding your real estate investing journey! Listed properties on the web is an option that has worked and still works for many investors. Another source would be to take your action to the another level and build relationships via networking. Relationships with existing multifamily owners, property managers, brokers, banks, or even contractors can lead to "pocket listings", properties for sale prior to listing or before considering selling. Get your name out there enough and you may get referred to as a potential buyer. I wish you success!
In general, some of the areas you mentioned are hot and pools are common, so are gyms, for the extra expected facilities, larger complexes are popular.
But there are some people that do not like the large more social scenes and would prefer a smaller complex. Not as many people go for the smaller places, but not as many complexes either.
Having lived in AZ and CA in the past, the smaller multi- residential properties are not as common as in the south (where I live now) and east (where I also lived and visited a lot in the past).
Note: never lived in TX, just passed through so I know nothing for TX.
One angle that might help is you have the pet option. I have been thinking about smaller Multi in places with huge Multi-Facilities and you have to think some of those bigger facilities offer dogs of a certain size and weight. They seem to favor the little lapdogs over the full size breeds. Well not everyone is Paris Hilton. Just something to think about.
I don't recall which data provider or financing firm published the report, but a bit of information was published stating that the majority of Americans live in smaller apartment buildings (<15 units). The larger properties are more "visible" but there seems to be more inventory of the smaller kind because that was more common in the era when older multi-family housing was developed.
The report was specific to certain markets, but I think you can get a feel for the truth of that statement by driving around. That is certainly the case here in SoCal where more people live in small complexes than the larger ones.
Food for thought. As the institutional-sized assets increase in value due to the large operators acquiring, renovating, and selling them, the overall rents get pushed up, including smaller assets.
Assuming you underwrite the asset, you should be fine either way.
@Nick Mulligan not many people talk about how different areas of the country have different building stock. There are a lot of areas of the country where there just isn't a lot of purpose built small multifamily building stock around to choose from. In some areas the only multifamily properties are big old single family homes that were converted, which can definitely lead to major capex issues down the road.
I think your investing strategy needs to fit your local market to some extent. Maybe a live in flip makes more sense if you are in an area filled with suburban homes built in the 80's 90's and 2000's. In my market here in Chicago, there are thousands of three and four units, so it makes sense to target those over single family homes. It really all depends on what kind of inventory is around!
Small multifamily 3 to 4 units, as you said you're interested in, can offer people different level of amenities, privacy, peace & quiet. For example I have a 3 family that looks like a single family house - it offers with privacy, a nice porch for one unit, a nice back patio and basement for another.