Unit count comparison between buildings - Is there a preference all things being equal?

3 Replies

Everyone talks about acquiring many units/doors but is there a preference if you are comparing two buildings where one building has high rents but low units and the other has low rents with high units.  Assume they both cost the same and have the same expenses and return.  

For example a 20 unit at $500 per door versus a 10 unit at $1000 per door.  Logic would say if the return is the same then go with less tenants but curious of the pros and cons.

Any input is appreciated.

All other things equal, I think fewer tenants would equate to less of your time spent managing the property. You would have fewer leases, and less time spent on turning around a unit between vacancies. You would also have half as many kitchens, so over the long run that's fewer appliances to maintain. Not to mention half as many heater/ac units and water heaters to worry about. 

Based only on the information given, I would take the 10 unit. I'm interested to hear if anyone would go the other way and why? 

@Jim Robertson I am thinking the same but thought to see what others think. Not all units are created equal so having a specific goal acquiring a specific number would need to be based on the return associated to them.

@Keith A.    As noted by @Jim Robertson , maintenance and management are generally lower when you have fewer units at a higher rent level versus more units at a lower rent level. So, everything else being equal, I would go for fewer units. 

The key bragging metric should be cash in your pocket, not number of units. I don't suggest bragging about either, though.

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