Updated almost 6 years ago on . Most recent reply
Small MF (4-8 units) vs. syndication
I've got a decent amount saved up, and I'm accredited. In the market I've been looking, the CoC on turnkey (through agent, not company) is only about 6-7%. Cashflow with loan is maybe $150/door. Is it worth doing or just go with more passive investing with a syndication?
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4 units and under can typically get long term debt. 5 to 8 units looking at small commercial banks with shorter term loans.
The small units take up a lot of time to operate and work for the projected yield.
How much is your time worth is the question?
If someone can get a passive yield at 7% but make 500,000 a year at their job or business then their time is worth a lot. To really get passive with multifamily owning directly instead of investing with a syndicator you really need about 80 to 100 doors or more to build in scale. That generally means buying something at 6 million dollars in price or higher to get a decent area. Conversely with commercial retail someone can get passive starting at a million in price generally which is one of the main benefits.
The small units take up a lot of time to operate and work for the projected yield.
How much is your time worth is the question?
If someone can get a passive yield at 7% but make 500,000 a year at their job or business then their time is worth a lot. To really get passive with multifamily owning directly instead of investing with a syndicator you really need about 80 to 100 doors or more to build in scale. That generally means buying something at 6 million dollars in price or higher to get a decent area. Conversely with commercial retail someone can get passive starting at a million in price generally which is one of the main benefits.
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