Single family or multi family ???

Question

I’m in my single family number 6

Should I keep buying singles or should jump to multi family?

David Smith · Answer

If you are in northeast of USA, impossible to profit from single family rental.  Only multi family works.

Sean Tarpenning · Answer

Get a few 4 units while you still have the conventional financing available!

John Warren · Answer

@Rodrigo Cisneros there are two ways to look at this, and they all depend on your market. Can you get better cash flow from single family properties or from multi family properties? In my market in the Forest Park/Berwyn area of Chicago, you cannot cash flow very well on single family properties. The taxes are too high to make the numbers work well.

The second question is more about your exit strategy. If the numbers work on single family homes, they are almost always easier to sell when the time comes. You can give them a quick coat of paint, and list them on the MLS for an end buyer. Small multifamily is still fairly liquid in my market, but they are tougher to sell if you have any uncooperative tenants!

Bjorn Ahlblad · Answer

@Rodrigo Cisneros generally SFR is easier to sell and will appreciate more than other property types (in a bad economy it also loses value faster). The leverage in 10-20 unit properties is much better however, the per door price is lower and the rent to purchase multiple is more in your favor. You can buy a good 12 unit for 50-55k per door and expect to rent it for 775-850 per month; at least that has been my personal experience, and that is better than you can expect with singles and doubles. I have duplexes that are 150k per door and rent for 1600-not nearly as good as MF at 55k and renting for 800. The capex and maintenance per unit is much better with multiple units under one roof as are taxes and insurance. What I like best is the ability to force appreciation by upgrading units and raising rents and doing that to multiple units. Everything works if you can buy it at the right price and cover it with your tenant's rent. Review your goals-why are you doing this and what do you hope to accomplish? Decide what you are comfortable with and buy what you like. All the best!

Cesar Gamarra · Answer

I will always suggest multi-families for the simple reason that you diversify the risk.

Assuming you are buying for the same price, a SFR and a 4plex, if your house tenant leaves, you lost 100% of your income. If one of your 4plex tenants leaves, only 25% of your income suffers.

I know, the management is not the same but when approaching multis, in your calculations you should include the management fee so you personally do not have to deal with 4 tenants in this case.

Also, the banks in commercial properties (more than 4 units) base their lending decision on the income of the asset instead of your personal credit.

See if you can start at least with a duplex.

Good luck!

Phillip Massey · Answer

I live in the southeast and have chosen the single family route. I bought four last year and have 7 all together

David Steinbok · Answer

Depends what you want. Single family usually has better tenant profile, easier to sell, appreciates at a faster rate if its located in a nice neighborhood. And generally are easy to manage. Buildings have much better cash flow and you can raise the value much quicker by raising rents and lowering expenses. But buildings can be alot of headaches.

Runggu Panggabean · Answer

Assuming the returns are the same. I would go with multi family, because I believe it is a better return on your time. Having 16 units in one location is easier to manage than 16 single family homes all over the city.Right know it seem to me that the return on a single family home on average  in the same neighborhood is much higher in single family homes. Since it has been easier for me to get the return I want in the single family space. I am sticking to single family.

Jane S. · Answer

I was interested in a real nice duplex & each unit would rent easily for $1800 making the cash flow cceptable, BUT one unit rented to section 8 paying far under $1800 and I never close with sitting tenants. The other unit was vacant, thats my preference. Good luck.

Single family or multi family ???

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