MFH: apartments vs collection of SFH

4 Replies

I’m curious to know what pros and cons, pearls and pitfalls exist for 10-15 unit MFH deals that involve a collection of individual houses from one development... as opposed to the apartment building type of MFH. Thanks BP.

This is a great question with lots of different answers and opinions. Ill give you the few that I see. 

Detached single family homes are always considered residential even if they are owned by an investor with lots of other homes and property managed. This will help when getting started as those loans are easier to get until you reach about 10 loans. It is also easier to find deals on those properties. 

The downfalls to SFH are that it is harder to scale your business as you grow, there is more work in property management, which increases your costs, and the loans get harder to get as you grow.

Multi family can be intimidating but as you grow your business it typically makes more sense as it is easier to finance, and manage than the same amount of units than SFH's.

I would suggest building your initial portfolio with Single Family Homes and as your comfort level increases then move into multifamily. 

I also highly suggest to listed to The Apartment Building Podcast with Micheal Blank. It is the best information that I can find in that field, and its all free! 

Hope this is of some help! Good Luck! Aaron

Thanks Aaron. I was actually referring to a comparison of 2 types of MFH deals. The difference is in the structure of the physical property. On the one hand, you have a single building with multiple doors. On the other hand, you have a collection of individual homes on one area of land, each with their own door, roof, foundation, etc.. 

I understand that the lending on them is similar between both examples, as long as it is 5+ units, of course. I am curious about any differences in management, expenses, risks, etc..

Think of it from a maintenance perspective, cleaning, fixing, maintaining - one roof, one building, one plumbing/electric/water system versus multiple. So there're some differences. However if these several building purchase is the only one you can find and is income-producing then go for it. 

 
Originally posted by @George Ozoude :

Thanks Aaron. I was actually referring to a comparison of 2 types of MFH deals. The difference is in the structure of the physical property. On the one hand, you have a single building with multiple doors. On the other hand, you have a collection of individual homes on one area of land, each with their own door, roof, foundation, etc.. 

I understand that the lending on them is similar between both examples, as long as it is 5+ units, of course. I am curious about any differences in management, expenses, risks, etc..

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