MFH Deal But All Units Are 1/1s. Is it worth it? Suburban Area

[Neel P.]

I'm analyzing a deal for a commercial MFH home. It's in a B-class neighborhood that's about 20 min outside of the city center (in more of a suburban neighborhood).

All of the units are 1/1s though. What are the considerations for this type of deal?

My thought process: 

- Pros: Probably can get it for a discount. Decently in shape unit, rent rolls around $650

- Cons: 1/1s usually attract student, singles or couples. This is not a city center so I'm wondering if it'll mainly attract C class tenants who are very transient, or it'll be hard to rent. Less rental appreciation potential

Any insight from people who have looked into or bought MFHs with all 1/1s would be great. Thank you! 

[Neel P.]

Quote from @Gino Barbaro:

@Neel P.

Great question. Gonna give a lawyer answer. It depends. Depends on the market, some markets with students, and older populations do well with 1s. I would like to see a mix of 1s and 2s, more 2s than 1s. It usually comes down to pricing.

Great question to ask property management companies in the market. They have the data and can tell you the spread between 1s and 2s, and also tenant turnover.

We've actually seen more demand for 1s as the market softens, because the rent is less, and some are downsizing to save on rent

Gino

 Great feedback, I like the idea of asking my property manager. Ty!