Simple question. What do you prefer investing in & WHY? • Single Family Houses • Duplexes • Quads • Apartment buildings (10+ units)

50+ unit apartment buildings. Why? • Economies of scale which leads to lower cost per unit for almost everything (maintenance & repairs, capex, property management, etc) • Little income improvements through more efficient management leads to HUGE increase in equity. • You have on-site management and maintenance since the property can afford it - so it becomes more passive (notice I didn't say totally passive because it's not) Now they are harder to sell - but that also makes them easier to buy specially when you have a motivated seller on the other end. You can do more creative acquisiton techniques (seller carry back financing, deferred maintenance credits, etc) which lead to no money-down opportunities.

James, From a cost and containment perspective only; apartment buildings are the way to go. One location reduces time, which is money. From a selling point; I agree with @Michael Ealy. They tend to be more difficult to sell with much lower profit margin at the table. But the opportunity to make money as a landlord far outweighs this. Keep in mind, there is “opportunity” to make money as a landlord, that does not guarantee it will be there. It is hard work and a lot of sleepless nights taking care of tenants and all of the problems associated with a large building. I do love a two-flat or SFH for fix and flip purposes, in part because I am crazy...LOL I can’t help myself, I do love the construction side of things.l But I digress... Run the long term numbers, as I am sure you already know, and compare the three options side by side. Good Luck! Sue Hough

I like SFRs that's my niche I like the large exit pool at the end. I like owning my properties and having control. Multi-families are great and allow you to scale very quickly but that is not my expertise. My single focus is to dominate my niche.

@James Wise Apartment buildings (100+ preferred) is what I am interested in. 4 major reasons 1. Scalability of larger properties from a value add point of view enable you to make small improvements for big gains to increase the properties overall value 2. Occupancy!! The more units, the lower the risk for major vacancy. This will depend on your break even points and stress testing of the property but a basic example below. (Eg 1 unit can only be 100% occupied or vacant. 50 units at 50% vacancy is still 25 units producing income. 200 units at 50% vacant is still 100 units producing revenue) 3.You have the ability to utilize OPM to acquire property and still make a healthy profit for you and your investors 4. The larger the property, the better ability you have to utilize professional property management with having to worry so much about that expense affecting your return

I have SFH investments but have worked in construction most of my life. The more units the better. In relation to a renovation/price point of view: Wholesale pricing and discounts for larger renovations. Easier to manage personnel in one location than multiple projects. Can be at different stages of rehab on individual units and increase productivity. A delay in one unit doesn't necessarily delay the entire project. Experienced contractors. Clear barrier to entry for large multi-family. If they have done multiple projects, they are much more reliable when it comes to cost, quality, and schedule.

@James Wise i love the 2-4 Unit space. Buy right you can generate quite a bit of cash for a beginner with a door or two to hedge against an oops. Great financing for owner occupied methods. I admire and aim to get into the larger multi-family for scale, management quality, and larger return purposes. Some say larger multi-family are even easier to manage. What is it, you tend to see additional in-house after 50 units?

@James Wise I like SFRs. They're comfortable for me to buy More exit strategies Generally, longer tenancy That being said, if the right 10 unit came up for the right price, I wouldnt turn it down....

i will buy as many doors as I can get . I will not buy a single family house . Just not part of my strategy. I’m not into paying 100% of everything when Johnny tenant moves out and I’m not into losing a years worth of profit when a furnace or roof craps the bed .

Makes more sense multi family because if tenant leaves you don't feel it as much. In SFR if someone leaves you have to make the payments.

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James WisePoster

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Real Estate Broker
Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH

Buying & Selling Real Estate

Would you rather buy a SFR, Duplex, Quad or 10+ unit....Why?

James WisePoster

#4 All Forums Contributor

Real Estate Broker
Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH

Posted February 27, 2019 08:50

Simple question. What do you prefer investing in & WHY?

Single Family Houses
Duplexes
Quads
Apartment buildings (10+ units)

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Michael Ealy

Developer
Cincinnati, OH

Michael Ealy

Developer
Cincinnati, OH

Replied February 27, 2019 08:56

Originally posted by @James Wise:

Simple question. What do you prefer investing in & WHY?

Single Family Houses
Duplexes
Quads
Apartment buildings (10+ units)

50+ unit apartment buildings. Why?

Economies of scale which leads to lower cost per unit for almost everything (maintenance & repairs, capex, property management, etc)
Little income improvements through more efficient management leads to HUGE increase in equity.
You have on-site management and maintenance since the property can afford it - so it becomes more passive (notice I didn't say totally passive because it's not)

Now they are harder to sell - but that also makes them easier to buy specially when you have a motivated seller on the other end. You can do more creative acquisiton techniques (seller carry back financing, deferred maintenance credits, etc) which lead to no money-down opportunities.

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