Disagree with this, you still have HVAC, turnover and roof repairs in multifamily which could just as easily wipe out your cash flow. The difference is the volatility of owning multiple units versus a single house is usually a lot lower. Definitely more scalable buying multifamily.
Now I am in commercial RE. But not the standard MF like most do. I was seeking even better returns.
I invest in and syndicate RV Resort Campgrounds and also Build to Rent multifamily communities.
RV Campgrounds can deliver much higher cash on cash (12-15% average) and you don't deal with tenants since it is mostly transient, like a STR at a MF scale!
The BTR are excellent for building huge amounts of equity and if you do it right, have infinite returns from the cash flows holding them long-term.
I also do some other projects here and there. I don't like to just follow what others are doing. The riches are in the niches. Find great opportunities. Zig when others zag.
Here’s why many investors switch to commercial multifamily 👇
Let's say your rental property makes $200/month in cashflow.
Which is $2,400 annually.
This will WIPE OUT your cash flow:
❌ HVAC repairs
❌ Turnover costs
❌ Roof Repairs
Not to mention, you will most likely need 20% down to buy a rental.
$200K is a starter home these days.
→ How many rentals could you buy each year?
→ How many rentals would it take to replace your W2 income?
This is why many investors switch to multifamily investing.
Your typical new investor isn’t going to start off in commercial multi family because they can’t afford it or it’s hard for them to raise money for a 30-50 unit building. So if it comes to starting out like you said, I do believe single family 1-4 units is the way to go until they can eventually build up to get to multi family.