Buy and hold which style do you prefer ?

18 Replies

I am currently interested in only buy and hold properties, and tend to lean away from single family homes. Looking for opinons on Multi Family compared to Single Family. Thoughts?

Hi @Clark Michael ,

I think the answer to this question lies in where you want to be in 5-10 years, with what amount of income, and what lifestyle. A lot of the guests I interview work backwards from this and create the life they want.

I know people who've done quite well with single family homes, and also people who've done well in multifamily. What sort of multifamily deals are you looking at? 20 unit +? 50 unit +? 100+?

Tenant moves out of SFH....unable to find suitable renter for 2-3 months....do you have the funds to keep it afloat? Multi unit...you will always be able to cover at least your payment! That was the advice I got from the friends I knew who were long time landlords. Good luck! P.S. love my multi unit so far!

@Seth Ferguson I started with small multi family and I am looking for any type of multi family I can find and make work. Personally I like multi family much more and tend to stay away from SFH.

Mainly just looking to see what people prefer and why they do. 

@Clark Michael

I started off with single family homes and duplexes but quickly realized that I couldn't scale as quickly.
The larger multifamily deals allow you to bring in other investors, which in turn, allows you to scale faster. However, you're working with other people's money and need to be extremely solid with your set up, deal criteria, and the operation of the property.

Originally posted by @Mark Burlison :

Tenant moves out of SFH....unable to find suitable renter for 2-3 months....do you have the funds to keep it afloat? Multi unit...you will always be able to cover at least your payment! That was the advice I got from the friends I knew who were long time landlords. Good luck! P.S. love my multi unit so far!

My experience is different. I had more transient tenants in my multifamily than single family. My 3-4 bedroom houses attract families who are less likely to move. I rarely have a place vacant for a month and never in 16 years have I had a place vacant 3 months. Usually my tenants are back-to-back so no vacancy.

True with multifamily you may only have one unit vacant, but it happens multiple times, so the total vacancy ends up being the same or more over time.

Multifamily was very profitable, but I found it to be a lot of work. My single family homes are very passive, which just happens to fit my situation better.

I started with multi-family and now I only invest in SFRs for all the reasons Joe mentioned.   To me scaling to 50+ units is not my goal.  I like owning the houses and I like having a larger pool of buyers for my exit.  

Originally posted by @Clark Michael :

@Joe Splitrock I have heard that from a few people who invest in the single family homes. I have heard that is all people want, but then some have been broken by single family homes. How many single family homes do you have?

I have ten, they are B class with 3/2 or 4/2 layouts so they are nicer homes. That is the other thing is when you say SFH or MFH, there is a wide variety of both. I would not own SFH that are 2 bedroom or sub-$100K type properties. I would consider multi family if they were middle-high end type (not luxury). I am targeting a certain tenant class.

Originally posted by @Clark Michael :

@Frank Wong What did you not like from your multi family experience?

 Hi Clark,

There wasn't anything I didn't like.  It was the perfect investment for me when I bought it.  I had 4 units to spread out my risk and I still own the building today.  My investment philosophy and goals have changed.  I prefer to own houses, I like having a niche.  Apartments are being built everywhere and for some people renting an apartment gets old and want a house.  That is where my properties come in.  

There is no right or wrong here.  You can go both ways.  I just prefer houses and I like the edge that it creates for me. 

@Mark Burlison

I hear this argument all the time, I have dozens of sfh and when one is empty the others carry it just as a multi family would. Also the exit strategy is a lot easier with houses. The problem I am running into is scaleability, although most people do not wish to grow their portfolio to the size that it would ever hurt them. In my area the roi is a good 4-6% better on houses versus multi family. Most of the big money doesn’t want to mess with houses. I am fine with buying the scraps for a better return.

As a TK provider, we operate in C class areas in Indy. We've all but gotten away from multi's. The stability and ease of tenants has everything to do with that decision. There's a BIG difference between a family renting a SFH for $750, vs a tenant that "just wants something cheap" in the $500-575 rent range. Nearly all good renters in this price range would rather have their OWN place than shared walls. Unless you move up to bigger multi's, you don't really have any amenities (gym, on site mgmt, etc) to lure better tenants.

@jerrard, I appreciate your insight. There is wisdom in a multitude of counselors. My friends in my area shared there reservation with SFH and have experienced a loss of income(the ability to make the payment) due to vacancies. So I may or may not have have your experience with SFH....but there is still that possibility and I have friends that have too. Doesn't mean it's a bad investment, but you will need a reserve. I personally would rather have my one building with 4 units, then visit 4 different properties for repairs and or maintence. With one purchase I'm receiving income at around 1000.00 a month, 75,000.00 investment (down payment & closing fees). Didn't have to buy 4 properties, pay 4 closing costs, 4 mortgages, on and on. I do agree the SFH might be easier to unload at the end. Best of luck.

@jeff....in your Indy market people are renting SFH for 750???? That won't even get a good apartment where I live. I'm early into it....so, I'll reserve my judgment for later. My wife has a friend that is going to take over one of our apartments...she is moving out of the house she rents. They don't want to mow the grass or do anything! I think both rentals have there appeal. Cheers!