Contractor · Denver, CO · Member since 2020 · 41 posts · 24 votes
I’m currently toying with the idea of going for a small multifamily property instead of a single-family home to make the numbers work in a more competitive market.
I’d be curious to see what people have to say in regards to what type of property they prefer.
Realtor · Lima, OH · Member since 2019 · 22 posts · 15 votes
4y
Hey! It all comes down to your personal investment strategy/goals. I personally don't know a lot about Denver, but I always believe that it is wise to buy cash-flowing deals. Compared to where I'm at in Lima, OH - Denver is an appreciating market and if you can make a single family home cashflow and count on the appreciation being the large payday down the road, that could be a great idea. But if you are looking for stronger cashflows and to scale your rental business faster - multifamily is the way to go! Multi's bring about their own unique challenges and can sometimes be more management intensive - but I think it is easier to scale buying multi units rather than trying to scale buying single family homes. I own both - but I am going to focus on small multi's for now because it fits my personal strategies and goals better.
You looking for big cashflow or minimal cashflow with equity appreciation?
Realtor · Lima, OH · Member since 2019 · 22 posts · 15 votes
4y
Hey! It all comes down to your personal investment strategy/goals. I personally don't know a lot about Denver, but I always believe that it is wise to buy cash-flowing deals. Compared to where I'm at in Lima, OH - Denver is an appreciating market and if you can make a single family home cashflow and count on the appreciation being the large payday down the road, that could be a great idea. But if you are looking for stronger cashflows and to scale your rental business faster - multifamily is the way to go! Multi's bring about their own unique challenges and can sometimes be more management intensive - but I think it is easier to scale buying multi units rather than trying to scale buying single family homes. I own both - but I am going to focus on small multi's for now because it fits my personal strategies and goals better.
You looking for big cashflow or minimal cashflow with equity appreciation?
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
4y
@Christian Albright competition is in every asset class. SFH, 2-4 units, small multifamily are all seeing high demand virtually across all markets. I would not get caught up in the idea that jumping from one asset class to another is going to be easy. Furthermore, it all depends on your investment strategy. What if a SFH performs better as a short-term Airbnb than a small multi-unit property? The point is, your question is entirely dependent on several factors, to mention a few, location, overall investment strategy, intended purchase price, etc. To simply pick one or the other is bullish. Hope this makes sense and helps!
Hey! It all comes down to your personal investment strategy/goals. I personally don't know a lot about Denver, but I always believe that it is wise to buy cash-flowing deals. Compared to where I'm at in Lima, OH - Denver is an appreciating market and if you can make a single family home cashflow and count on the appreciation being the large payday down the road, that could be a great idea. But if you are looking for stronger cashflows and to scale your rental business faster - multifamily is the way to go! Multi's bring about their own unique challenges and can sometimes be more management intensive - but I think it is easier to scale buying multi units rather than trying to scale buying single family homes. I own both - but I am going to focus on small multi's for now because it fits my personal strategies and goals better.
You looking for big cashflow or minimal cashflow with equity appreciation?
I like the idea of small multi families due to the efficiencies of management in terms of all being in the same location. You also get economies of scale to some regard (especially in terms of mowing one lawn instead of four separate, signing up for one trash service, etc).
House hacking is the plan, I have a current townhouse that I am house hacking and I like that strategy. My current living situation does not necessitate a house and I like having roommates.
An additional question would be do people prefer small multifamily or getting into what would technically be considered a commercial property? (5+ Units)
Hey! It all comes down to your personal investment strategy/goals. I personally don't know a lot about Denver, but I always believe that it is wise to buy cash-flowing deals. Compared to where I'm at in Lima, OH - Denver is an appreciating market and if you can make a single family home cashflow and count on the appreciation being the large payday down the road, that could be a great idea. But if you are looking for stronger cashflows and to scale your rental business faster - multifamily is the way to go! Multi's bring about their own unique challenges and can sometimes be more management intensive - but I think it is easier to scale buying multi units rather than trying to scale buying single family homes. I own both - but I am going to focus on small multi's for now because it fits my personal strategies and goals better.
You looking for big cashflow or minimal cashflow with equity appreciation?
I like the idea of small multi families due to the efficiencies of management in terms of all being in the same location. You also get economies of scale to some regard (especially in terms of mowing one lawn instead of four separate, signing up for one trash service, etc).
House hacking is the plan, I have a current townhouse that I am house hacking and I like that strategy. My current living situation does not necessitate a house and I like having roommates.
An additional question would be do people prefer small multifamily or getting into what would technically be considered a commercial property? (5+ Units)
And to answer your question I’m going more for cash flow, but equity is always great too. The end goal is portfolio growth as well as financial independence asap. As I’ve seen in Denver‘s current market at least working with single-family homes you sacrifice cash flow while living in a house hack but gain significantly in equity.
I’m currently toying with the idea of going for a small multifamily property instead of a single-family home to make the numbers work in a more competitive market.
I’d be curious to see what people have to say in regards to what type of property they prefer.
What’s your definition of a small multi family? With that being said what is the availability of multi family? What is your ability to buy a multi family versus a single-family house? As you can see simply getting people to say multi family because they think it sounds neat is not always a clear path to logical destinations.
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
4y
@Christian Albright
I target single family in C+ hoods. Zero turnovers and no drama. These people are all lifers that will never be able to afford or qualify to buy a home. They can stay with me for years/decades and pay me good cash flow while paying off my mortgages.
New to Real Estate · Tampa, FL · Member since 2021 · 17 posts · 9 votes
4y
It all depends on your goals and the lifestyle you are comfortable living, generally the more you can decrease the quality of your lifestyle with a house hack, the more it can cash flow. If you can get a SFH with a garage or a large driveway, you can live in the garage or park a trailer in the driveway and live there. Not comfortable, but you could cashflow heavy for a year while saving up for a larger investment. MFH is the classic way of house hacking, do not get stuck on it. Get creative. I read a book called the 'The house hacking strategy' by Craig Curelop and it helped me a lot.
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
4y
@Christian Albright Is a house hack a goal of yours in the future? Study the requirements for an FHA loan like a book and make sure to set yourself up for success. Examples would be building up your credit, getting the most recent tax returns for the last 2 years in the same field, building up capital for the down payment, closing costs and 6 months in reserves so you can use as much of the rental income from the other units as your own income when you getting qualified. These are some barriers I had to make sure to be able to climb over. Let me know what questions you have.
Investor · Cary, NC · Member since 2019 · 25 posts · 29 votes
4y
It really comes down to what you personal goal is for investing. I personally like having multi families more because I want more doors based on my end goal. Each door will pay for apart of my life once its all said and done. I also own single families as well that cash flow very well but I don't see in the long term being able to scale as much or as fast with single families.
I’m currently toying with the idea of going for a small multifamily property instead of a single-family home to make the numbers work in a more competitive market.
I’d be curious to see what people have to say in regards to what type of property they prefer.
Hi Christian. For me it's always about the math. If the numbers are solid, go for it.
I’m currently toying with the idea of going for a small multifamily property instead of a single-family home to make the numbers work in a more competitive market.
I’d be curious to see what people have to say in regards to what type of property they prefer.
I have more multis than singles. In expensive markets multis cf better and are more effective to market to when sourcing deals. They are absentee owned much more often.
I will just add that my multis have additional costs that singles don't. W/S/G, snow removal, yard care, etc. My house tenants take care of all that on their own.
Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
4y
@Christian Albright, it also depends on if you're going for cash flow (taxable income) or offsetting current taxable income from your job or other properties.
Multi-family units tend to be more cash flow heavy so you may not get all of the benefits of depreciation. If reducing your taxable income is your play you may want to lean more toward single-family and minimize the cash flow (still taking into consideration the repairs and CapEx) so you can get the most benefit from it.
Realtor · Springfield, MO · Member since 2020 · 21 posts · 9 votes
4y
@Christian Albright It really comes down to your goals and the area. For me multifamily was the way to go. The cash flow it offered was great for the price and I house hacked it as well. If it's possible I'd HIGHLY recoend house hacking, especially if it's your first investment. It was the perfect way to learn how to be a landlord, helps pay off your mortgage, and offers very powerful loan options if it's your primary residence. One thing to keep in mind though, single family tend to have longer occupancy rates than multifamily, at least that's how it is in my area. With multi-family you'll likely have higher chances of turn over. But if you plan for vacancy ahead of time it's a non-issue!
Rental Property Investor · Conway, AR · Member since 2017 · 146 posts · 75 votes
4y
@Christian Albright
Personally , I have ~40 SFH and 5 duplexes. I like knowing that at any point I can sell my single family houses and have competition over them.
Duplexes I think are still pretty competitive. But I remember someone telling me a long time ago that the majority of Single Family buyers are owner occupants and the majority of Multi Family buyers are investors and there aren’t as many of those out there that can afford mid - high level multi family.
That being said, I’m currently looking for a 30-40 unit multi family , because it fits into my long term goals since I have met my single family RE goals.
Rental Property Investor · Rockford, IL · Member since 2019 · 471 posts · 342 votes
4y
@Christian Albright
I like the multi-family investment better, most times. It takes the same work to get and finance a multi-family as it does a sfh. More money for purchase perhaps, but more than one income potential is best in a market that could go nuts again for no good reason at all.
If you have 4 tenants, in one property, there is a better chance that each will not stiff you at the same time, allowing you to at least pay the mortgage!
I’m currently toying with the idea of going for a small multifamily property instead of a single-family home to make the numbers work in a more competitive market.
I’d be curious to see what people have to say in regards to what type of property they prefer.
What’s your definition of a small multi family? With that being said what is the availability of multi family? What is your ability to buy a multi family versus a single-family house? As you can see simply getting people to say multi family because they think it sounds neat is not always a clear path to logical destinations.
Hey Joe,
My definition of small multifamily is when it’s still considered a residential property so (1-4) units. In terms of ability I feel that being able to purchase a small multi family or a larger what is considered commercial multi family are both options. It just comes down to how I would structure the deal and how I would finance it is what would change. If I could use projected rental income for small multi family I can most likely get a secured loan from the bank at a lower interest rate. If I ended up going with more than four units then it would most likely require me to use private money or a hard money lender to secure financing and therefore pay a higher rate initially until I could re finance into lower rate. My purpose for the post was to see how it worked out for people and what kind of deals they structured whether it was single-family or multifamily.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
4y
@Christian Albright multi family can have better returns and cash flow but it's not guaranteed. There is usually more risk with a multi family so you want to make sure the risk/return justifies it. The tenant profile for multi families tend to be much different. Often times they are less stable and don't stay as long. They also don't treat the place with as much care in many cases. You'll need to assume higher vacancy and maintenance costs. Keep in mind that you have two of everything to repair or replace. You're CAP Ex expenses can be twice that of a SFR while your rent may only be 1.5 times that of an SFR. It's very possible to generate the same cash flow or more from a higher end SFR renting for say $1500 than a duplex renting for $750 per unit. It all comes down to the particular deal and the numbers.