Multi family Units or Single Family Units?

Question

I’ve been seeing a lot of controversy on what could potentially have a larger ROI, investing in single or multi family units. A lot of the books I have been reading, specifically by Micheal Blank and Grant Cardone, states that multi family investing is the way to go and single family units don’t generate a large return and are more of a headache.

Opinions?

Brian Miller · Answer

Each has its pros and it's cons. Even Grant Cardone started with single families. My take is, pick a particular niche for yourself, and location and focus on that. There is no right or wrong answer. Buy and add value.

Remington Lyman · Answer

There are pros and cons of each type of investing. I have 6 properties in Columbus, Ohio and all of them are multifamily.

I have some buddies that only invest in single-family. The important thing is that you pick a plan and stick with it.

Ryan Mainwaring · Answer

@Sianni Pineiro I echo @Remington Lyman said and would add it depends on your goals.  What are your realestate goals and timeline?

Michael Swan · Answer

Swanny says do what floats your boat!! I have always believed the teacher will appear when the student is ready.  I was ready when I had 10 single family, ten roofs, ten mortgages etc... Sooner or later the teacher will appear and a better way (Multifamily, Non-recourse scalability) the teacher will appear.  Since Podcast 238 I have educated people the same way, David Lindahl, Del Walmsley, Michael Blank etc... educated me to scale and eventually get to 1,000-2,000 units which is my new goal.  Currently a principal owner of 230 units in NE Ohio and Indiana.

If you change the way you look at things, the things you look at change right before your eyes!!!!

Swanny

Aigo Pyles · Answer

If you are going to start, I say start with single family home. The cash needed is low compared to multifamily home. It is easier to get approve with single family home. Multifamily homes on the other hand allows you to have larger scale of cash flow as the vacancy is less. If one unit is vacant and other unit has tenant, you still have cash flow. Going for a multi family home if you are only starting is risky but the income is higher. But if you want a long term stable investment, I'd say go for single family home.

These days more family prefer single family homes (if they have a choice) as it is safer to live during pandemic.

Steve Rozenberg · Answer

I would suggest you take in all the information, learn the differences as much as you can. Then you need to create your specific goals that are set for you. They need to be a SMART goal and most important you have a to have a date associated with it.

Once you know what your goals are and what you want as a end result of owning real estate, then you create your strategy to get you there (Buy and Hold, Flipping, Wholesaling, Notes etc..._ you create non negotiables associated with the numbers you need to make sure you are on the right strategy that is taking you to the goal.

Lastly once you have the end goal and the strategy you decide on the tactic. This is where you determine if it is SF or MF as the vehicle that will get you to the strategy to achieve your goals.

Both SF and MF have pluses and minuses, you have to make sure that is part of your strategy to take you to your goal.

The reality is that when you own real estate you own a business, that business has processes, procedures and structure.

Part of that are systems wrapped around those tactics so that your are not dealing with the actual property if you are truly running it like a business it wont matter because owning real estate is a purely mathematical equation based on the numbers not on emotions.

Just my opinion for what its worth.

AJ Shepard · Answer

There are pros and cons of each type of investing. Single-family homes are usually less expensive to get started compared to Multifamily housing. Single-family homes are easier to finance, carry lower interest rates. However, the advantages of having Multifamily properties are it scales faster and an opportunity to get higher monthly cash flow.

John Morgan · Answer

@Sianni Pineiro

Single family excites me. Less turnover and most of my tenants seem like lifers and won’t ever qualify to buy a home. They can bring all their animals and stay at my places forever. And I take good care of them when things break down or issues come up.

I met an investor who has been doing real estate for over 40 years. Multi family exited him and he owned a bunch of multi family. I asked him what the average length of time a tenant stayed. He said 17 months. That turns me off right there. Turnovers are costly and time consuming. I would rather have people stay 5-10 years or more, but have a slightly lower ROI. Less stress for me = happiness. Plus you don’t have to deal with tenants having issues with each other. You hear about that all the time.  No thanks.

Jesse Daconta · Answer

Hey Sianni,

Grant Cardone and Michael Blank are little biased ;)

I personally love apartment complexes and I'm always happy to talk about them.

Best,

Ron Todd · Answer

I have a mix of both and for me it's about the numbers making sense. I prefer multi's now, but it was nice to start with SFH and work my way up. I'd say the multi's tend to be more work, but it really depends on the tenants. I've had some SFH tenants that were more work than a quadplex full of people.

Multi family Units or Single Family Units?

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