Please share your reasoning for investing in single family homes vs apartment buildings.
If you are a multi family buy and hold investor and I had a 10 unit single family performing portfolio in Cumberland County, PA what factors would spark your interest?
@Ben F. , I'll throw out some pros and cons for each.
For single family rentals some pros are that you can create a "forever home" for a tenant. On the surface that doesn't sound lucrative, but vacancy is a HUGE cost. The opportunity cost of lost rent, the cost and effort to refresh the home and find/vet a new tenant is significant. Also with this scenario you can potentially attract a better quality tenant because you are giving them more of what they want. Exterior property maintenance like lawn mowing and snow removal can be the tenants responsibility.
Another good pro for a single family is that they probably tend to appreciate in value a little faster.
Multi-families are more efficient in terms of cost. Taxes, insurance, maintenance, and cap ex all tend to be lower per unit on multi families. So, even with lower average rent than a single family, they tend to cash-flow a little better. For that cash-flow you will likely have to be a little more hands-on managing the property and tenants.
As for a 10 unit single family performing portfolio. Most people would list and sell them individually because an owner occupant will often pay more than an investor.
Totally appreciate the detail! Good answer
So with the 10 unit portfolio, would you prefer to enter considering a cumulative or an individual cash flow analysis?
@Ben F. , it depends on if you are willing to sell them individually. If some of them are less appealing for one reason or another, you may want to ONLY push the idea of a package deal.
However, if you think each of them stands well on their own, then you could probably do better selling them individually.
I would present the information and the deal how I would expect it to best work out for me. So, if I thought it was better to sell as a package I would ONLY give out cumulative info and ONLY look for offers on the whole package.
@Kevin Sobilo Agreed. Makes sense. I’m still compiling data and will make those decisions