Things people don&#x27;t tell you about multi-family

Tj Hines

Specialist · Tampa, FL · Member since 2012 · 933 posts · 492 votes

7y

@Shane Craig a lot has to do with the area where you're buying or have the asset too as well. Are you in a thriving area where people are dying to move to? Or do you have more people leaving the area than flocking to it. The area will determine the type of tenants you will attract. Also this comes down to management. Who's screening the tenants? Can you improve the tenant profile? Will the area allow you to? Some things to think about

4 Reply

Guy Yoes

Rental Property Investor · Springfield, MO · Member since 2017 · 266 posts · 312 votes

7y

I currently hold duplexes and mobile homes, but i understand the issues. I've had a few complaints. But when I tell them they can move out and forfeit their deposit and pay the rent until I find a new tenant.... they suddenly decide it was not as bad as they described it was. ;-} Of course 90% of my tenants are elderly and on a fixed income and their issues are minor. Mainly they want someone to talk to who cares about them. So we have some coffee and talk and I say "bye, I'll see you next week.

9 Reply

Joe Scaparra

Investor · Austin, TX · Member since 2013 · 662 posts · 1k+ votes

7y

@Shane Craig, yes you make some good points but you might want to narrow the discussion some. When you compare SFH to multifamily, is the multi-famly a duplex, 4plex or apartment complex?

My initial thoughts were comparing SFH to a duplex. That is because I invest in duplexes almost exclusively. It also makes sense to compare a SFH to a slightly larger property. If you want to compare it to an 8plex, why? Why not compare it to a storage building then.

If comparing to a duplex then the problems you highlight are exaggerated. For my duplexes, parking expectations are not an issue as I discuss this at lease signing. Smells again over-exaggerated, only a potential issue if they share a porch and I have a no smoking policy on the common use porch. Drama, yes even with a duplex you can have drama. HOWEVER, I don't let my tenants pull me in their trivial BS. If it is noise, I tell them to call the police, if it is trash or something that may violate the lease then I will address. I also let them know I EXPECT them to get along and address their problems directly between tenants. If they don't, I just don't renew the problem tenants. I am in the power position as MY Properties are the best kept on the block, the rents more than fair and the rental demand is HIGH!

All these minor issues are offset by the increase in cash flow and superior advantages a duplex has over a SFH during a downturn in the economy. Cheers!

3 Reply

Jill F.

Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes

7y

I don't feel like I have to address every complaint. You are LUCKY if you have a tenant or two that will tell you when there is a *real* problem going on. I have multi-family in C-/D+ area and Bish areas. I have had every complaint that you mentioned (plus a whole lot more)-- but I also still love multi-family. I think a person's attitude about these types of situations/complaints determines whether or not landlording is a good fit.

6 Reply

Michael Swan

Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes

7y

@Shane Craig

Interesting points!! However, after 4 yrs Multifamily and 200 units, I have $180,000 in cash flow per year and rising. I told my story on Podcast 238.

Swanny

12 Reply

Nick Rutkowski

Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes

7y

@Shane Craig

I’d go short term rentals on multifamilies. It saves me a lot of hassle and money running my rentals without long term tenants. Plus I’m the host and I love talking to new people all the time.

3 Reply

Alina Trigub

Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes

7y

@Shane Craig

I think it is a good forum. However every asset class investing has it's own pro's and con's. While smelly tenants maybe an issue, nothing beats for me at least the scaling effect offered through commercial multifamily investing. It all comes down to what you personally believe in, and hence, what works best for you! For some it's MFH, for others it could be note investing or flipping houses.

Here're my reasons for choosing multifamily investing:
https://www.biggerpockets.com/member-blogs/10850/74895-five-reasons-why-i-chose-to-invest-in-multifamily

Corby GoadeBusiness Member

Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes

7y

Totally agree. This is why I don't consider managing anything larger than a duplex- let the commercial PMs handle that, it's a totally different beast. On a SFH, the average call is a leaky pipe or furnace repair. With a multi the average call is a complaint about another tenant. What is the PM supposed to do? Tell the neighbors to stop making tacos for dinner because the people next door don't like the smell? No thank you- I have no interest in being a counselor for adults who have no idea how to solve their personal problems, life is too short.

Todd Dexheimer

Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes

7y

We don't get these complaints very often. Most of my properties are managed by 3rd party, so I don't hear about those types of complaints from them, but even the 60+ units that we manage in house don't have those issues. Not sure if it's because our properties are in really good condition and updated or if it's that most are in A/B locations or just lucky.

Scott Morongell

Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes

7y

@Shane Craig parking as a resident can be challenging but a great problem for an owner :) charging for VIP parking spaces at 10-15$/month divided by market cap will put a smile on your face. Paint is cheap. One of the biggest bangs for your buck when it comes to ROI.

I haven't seen too much in regards to smells but noise can certainly be an issue. One way to diminish it is to keep carpet and add padding under your planks on upstairs floors.

Ola Dantis

Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes

7y

@Shane Craig Reading this, I couldn't help but chuckle a little bit because I felt like that in the beginning. We could never find parking in a Class A area we bought our first building in Baltimore, MD.

However, I think it is important to make that distinction when it comes to the type of Multifamily you are talking about.

You are referring to SMALL MULTIFAMILY [2-4units]. For larger properties, you will either have really good sound proofing structures to help with noise reduction and/or the PM company deals with all that jazz.

We got a couple of noise complaints but that was it, as I informed the top tenant to be mindful of the bottom tenant and that was that.

Now, if you are an area where the tenant demographic is a bit more interesting, then these issues can become a real problem.

Honestly, this is the way I see it, Shane. For me to really secure my future, a good retirement plan, I have to deal with things such as these now and I am fine with that.

Look, in life, there is always a price to pay (and there is never a discount). We have to pay the full price, for now, to have a better tomorrow.

SOLUTION: Write a strong-worded letter to all your tenants and inform them of the noise policy and noise times while reiterating that the policy should be followed.

Good luck...

8 Reply

Nik S.

OH · Member since 2014 · 454 posts · 227 votes

7y

@Shane Craig

Asset class CAN help mitigate complaints. I invest in C/B apartment buildings. Complaints are going to happen. Issues will arise. It’s all part of the business. Like others have mentioned, I use a PM company so I don’t hear the complaints, only major ones and that’s not too common. A solid PM will be tough with tenants and not take their BS.

For me it comes down to wanting to have 100+ SFH's OR 100+ apartment unit doors (I wouldn't buy a property unless it has 20+ units). Economy of scale. To each their own but having a ton of SFH's gives me serious anxiety.

Robert C.

Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes

7y

@Shane Craig, “Gymnastics” or gymnastics?... Ha. Cause I’ve gotten complaints about both.

The neighbor issues are the most bothersome, but I make sure tenants know that we don’t get involved unless it’s a life/safety issue or with multiple complaints from different neighbors we will send a letter. People don’t know how to just talk to one another anymore.

Karl B.

Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes

7y

Things I was unaware of prior to getting in: backflow preventers, how great coin-op laundry is in a multi-family, and how often people leave nice things behind.

Jeffrey Bower

Member since 2019 · 94 posts · 50 votes

7y

The BO issue and "gymnastic" is amusing. I screen my tenants, but I don't know if there is a way to tell if a tenant will smell bad or execute stylish moves from a credit report. Lol.

Ryan Deasy

Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes

7y

@Shane Craig this is very interesting and to be honest i have experienced these same issues. i have one single family house and the rest are multi.

in my opinion, going from MF to SF based on these reasons is the same as being CEO and making 500k per year and deciding you’re fed up with the responsibility and stepping down to an assistant manager role with a dramatic cut in pay and responsibility.

my SF can’t even begin to touch the cash flow that the MF generate. thus i embrace all of these issues and more in the noble quest to generate maximum cash flow and provide quality living spaces to all of those in need.

Michael Noto

Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes

7y

@Shane Craig Do you have to deal with snow removal in the area where your properties are? If so, you definitely want to have a plan for that going into the winter. That has the potential to be a major pain when you have parking areas shared between tenants like it sounds like you have.

Ryan Proffit

Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes

7y

@Jeffrey Bower most professional tenants wait 30 days after move in before busting out their roundoff back handspring.

Pat L.

Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes

7y

We love them. But adequate parking is a must as is code compliant fire safety. Although we self manage we rarely hear any complaints but we do have a live-in maintenance guy that takes care of any minor issues.

I often drive by this strip (pic below) of C-class low income multi's. The majority are 8-units & some have 2 or more buildings per lot (I counted 43 buildings).

In the last 4 months I have only seen a short lived vacancy sign on 2 of the buildings. These are the proverbial CASH COWS of the area & appear to be fully rented at $600+/unit plus electric. But in the same area we can get $800/month for a nicer 2bed upper in a duplex & the demand is there.

(The 'village' bottom left is a HUGE mobile home park).

Chris Wolfe

Member since 2018 · 44 posts · 47 votes

7y

Difficulty in obtaining bank financing is another issue. I had a 14 unit complex that was in excellent shape, super low LTV 30% and I had the hardest time getting a refi done. Way more difficult than anything SFR or 2-4 Units.

Scott Rogers

Rental Property Investor · Neenah, WI · Member since 2019 · 154 posts · 105 votes

7y

I only buy MF if it cash flows after adding in the PM fees.