Starting my journey with a multifamily? Any tips/advice?

Question

I have seen the general trend to be to invest in SFHs and then consolidate to MFHs eventually.

I am in a position that from other investments and my W2 income, I can possibly afford to by a quadplex or even larger. I’ve seen some 16 unit properties for sale in my area in Charlotte NC that I have the down payment to make potentially.

I feel like I’m skipping ahead and taking a shortcut but is it a terrible idea to go straight to a larger property?

Ashley Rigsbee · Answer

Nikesh, this is a great question. I know larger multifamily means commercial financing, likely a property manager from day one, and different underwriting than a duplex or quadplex talking to a commercial lender early, could be helpful. Charlotte's a solid market for this curious what part of town the property's in?

Stuart Udis · Answer

@Nikesh Patel How confident are you in your underwriting? Especially ability to identify systems nearing their end of their useful life and other cap ex items that may hit after completing the purchase? Expect most real estate to ultimately be far more capital intensive than merely what's needed to complete the purchase.  Maybe there's a middle ground more conservative approach where you can buy a smaller multi-family property and preserve some liquidity. Also it's important to understand the investment strategy behind buying SFH's and multi-family. For those who really understand SFH investing, they understand the asset classes serve entirely different purposes in many instances.

Nikesh Patel · Answer

Not confident at all. I’ve been suffering from analysis paralysis for years now lol