Small Multi-Family vs. Single-Family for a First Out-of-State Deal?

Question

Hi BP community,

I’m a new investor based in California, looking to start my portfolio through out-of-state investing. My target is the $80K–$125K range in landlord-friendly markets with steady job growth. I’m most interested in BRRRR and buy-and-hold rentals, and I keep going back and forth between starting with a small multi-family (duplex/triplex/fourplex) or a single-family rental.

Here’s where I’m stuck:

• SFRs seem easier to manage and may be less intimidating for a first deal, but the cash flow might be tighter.
• Small multis could bring stronger cash flow and efficiency, but I’ve heard they can be tougher to finance, and vacancies or tenant issues could hit harder if I don’t have a solid team yet.

For those of you who’ve been down this road already:

• Which one did you start with, and why?
• Looking back, would you do it the same way?
• What do you think is the best path for someone investing out of state for the first time?

I’d love to hear your experiences and lessons learned — it’ll help me take action with more clarity and confidence.

Thanks in advance,Christopher

Bradley Buxton · Answer

@Christopher Rubio

Good to see you’re ready to take action! Before jumping in, it’s important to think about why you’re investing and what your short- and long-term goals are. Both single-family homes (SFH) and small multifamily (MF) can play a role in a successful portfolio.

Single-Family Homes (SFH): Typically attract longer-term tenants, easier to sell when you exit, and often lower maintenance (fewer systems to repair).

Multifamily (2–4 units): More income diversification (if one tenant leaves, you still have cash flow). Value is based heavily on the rents and how well the property is managed. Financing under 4 units is similar to SFH, though you’ll want to factor in age, condition, and insurance costs.

Both can be part of a solid strategy—the bigger question is whether you want to buy all-cash with $125K or use leverage. Out-of-state investing has its own risks: travel time, reliance on contractors/managers, and the need for cash reserves if something goes wrong.

It’s natural to feel like you need to “start now” or you’ll miss out, but it’s worth weighing the pros and cons of buying a $125K property in an unfamiliar market versus leveraging your capital in an area you know and trust.

You’ll see plenty of posts about Ohio or other markets being “the best” due to jobs, affordability, and population trends—and there is money to be made in many markets. The key is aligning your strategy, capital, and comfort level with the right location.

In my market in Reno Tahoe there are better deals in the SFH market than the small MF because of the short supply and sellers' overvaluation of multifamily. Which is better today? Depends on the strategy and goals of each buyer.

As many have said in these forums, find your market and dominate it.

Kate Sanchez · Answer

@Christopher Rubio SFRs = simpler to finance/manage, small multis = stronger cash flow but more moving parts. For your first OOS deal, focus on building your team/system. You’ll scale faster once that’s dialed in. Good luck - you got this!

Garret Rumbea · Answer

Hey Christopher good to meet you. I actually jumped right into larger MF syndications right off the bat. I was working in the industry and surrounded by others who were doing it, and I like the team aspect of it esp because it allows us to get into larger deals than I could do alone. Always happy to connect if you'd like.

Bernice Retzloff · Answer

Welcome, @Christopher Rubio! Love how clear you already are on your goals and buy box, that’s a huge advantage getting started.

You’ve already nailed the trade-offs:

• SFR – simpler to finance, easier to manage remotely, and often attract longer-term tenants. Downside is that if it’s vacant, you’re at 0% occupancy.
• Small Multi (2–4 units) – stronger cash flow potential and spreads vacancy risk across units. But, as you said, financing can be trickier, and management (especially out-of-state) requires a strong PM and reliable contractors.

SFR – simpler to finance, easier to manage remotely, and often attract longer-term tenants. Downside is that if it’s vacant, you’re at 0% occupancy.

Small Multi (2–4 units) – stronger cash flow potential and spreads vacancy risk across units. But, as you said, financing can be trickier, and management (especially out-of-state) requires a strong PM and reliable contractors.

A lot of new investors I work with in Memphis start with SFRs, not because it’s the “better” strategy, but because it’s simpler for that first step. It gets you comfortable running numbers, building a team, and trusting an out-of-state process. Then they scale into duplexes and fourplexes once they’ve built confidence and systems.

Looking back, many experienced investors say they wish they’d gone into small multis sooner because of the economies of scale, but at the same time, those who started with SFRs often avoided the stress that can overwhelm new investors.

I’m a real estate agent here in Memphis, TN, and I help out-of-state investors build rental portfolios. Properties in the $80K–$125K range are very common here, both SFRs and small multis, so it really comes down to what makes you feel most confident about pulling the trigger.

If Memphis ever makes your shortlist, I’d be glad to share what’s working here and walk through examples of both options.

Small Multi-Family vs. Single-Family for a First Out-of-State Deal?

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