Canyon Country, CA · Member since 2016 · 1 post · 0 votes
Hi All,
I am fairly new to this industry and this website so forgive me if i ask the same silly question as everyone else has. I am looking to invest into multi-family homes. I am still at the basics of my research and I have narrowed down my locations to 2 cities (Finally!!). Anyway I am now in a dilemma. I was thinking to start with investing in a duplex or fourplex to start of with. But after watching and researching a lot of people mentioned to start with fiveplex plus property as it falls under commercial and is profitable than a fourplex. Can you guys help me in deciding if going residential or commerical is a good option?
Santa Clara, CA · Member since 2016 · 7 posts · 4 votes
10y
Hi Sarita,
Welcome to the world of REI! I am also new to the industry. I am planning on investing in multifamily properties as well. My thoughts are I want to have a large number of units and apartment buildings cater to that well.
I don't have any experience upon to answer your question, but I do have a few for you:
How did you decide upon which cities you want to invest in?
What other criteria have you decided upon for your investments?
What other criteria are you considering / debating about?
Wholesaler · Saint Augustine, FL · Member since 2016 · 328 posts · 98 votes
10y
I absolutely recommend starting with 5 or more units for so many reasons.
1. Commercial properties are valued not by comps but by their financials. I find a lot of comfort in knowing that there is a concrete way of valuing a property by use of mathematical equations. It takes the emotion out of the deal. The numbers are the numbers and they don't lie. If its not working, I walk away. If it does, hell yeah.
2. Financing. Banks are looking more at how the property performs and not as much at you and your credentials. This can be HUGE for an new investor looking to get into the game who may not have the best personal finances.
3. For those who invest for passive income: Commercial investing grants the opportunity for exponential earnings. The bigger the property, the more likely you are to scale up to bigger checks in the mail from your rental earnings. This, of course, is subject to many factors. But as an investor, you're goal is to make your money work most efficiently for you, right? So wouldn't you do everything in your power to make your property as profitable as possible? Add amenities, increase rents to market level, decrease expenses, treat your tenants well and reap the rewards.
4. And for those who do invest for appreciation: Every dollar you increase the rent and every percentage point you increase occupancy, you exponentially increase the value of your property. How fun is that?
Clearly I am a proponent for the benefits of commercial real estate investing over residential. But you have to choose whats best for you, girl! PM me with any questions.
Welcome to the world of REI! I am also new to the industry. I am planning on investing in multifamily properties as well. My thoughts are I want to have a large number of units and apartment buildings cater to that well.
-Steve
Hi Steve, if you're thinking of investing locally (Silicon Valley), it's a fantastic place to invest if you have the capital. Now is not the time to buy here, however. And whenever you invest here, you must be prepared for your investment being entirely correlated to the tech industry. If you're an accredited investor you might consider investment into DSTs. They are hands-off, institutional grade real estate investments, and they allow you the option to diversify. You can buy into institutional grade $50-125M projects with as little as $100,000. Professionals with decades of experience and very impressive track records do all the heavy lifting for you. You get potential cash flow, tax shelter and appreciation. Loans are non-recourse.