4 unit Apt vs 4 SFHs?

Question

Let's just say for S&G that you could get a nice 4 unit apartment building (2BR/1BA), for $1 mil. Let's also say that you could get 4 single family houses for the same price. (The houses will need a little bit of work, just cosmetic, and some might be MHs).

Assuming they rent for about the same $ per month, but expenses are a little more for the SFHs, which would you buy, and why?

Assuming they rent for about the same $ per month, but expenses are a little more for the SFHs, which would you buy, and why?

Bjorn Ahlblad · Answer

The 4 plex is easier to everything, inspections, maintenance, showing etc. Drawback is you can't sell one and keep three like you can with SFR's.

Luka Milicevic · Answer

I'm going to assume they are in the exact same location.

I would go SF in this case.

I know I have heard 1000 times management is easier, it's cheaper to replace one roof over 4 roofs, etc etc.

It has not been my experience investing in MF at all. My expense ratio on MF properties has been WAAAAY higher.

I have significantly more turn over and turn over is a killer when it comes to repairs and capex....and vacancy of course. My SF homes have long term tenants that never seem to leave and take really good care of the property.

Overall, my personal experience has been SF homes have much lower expense ratios.

I know you can argue this topic so many different ways, but that has been my personal experience.

Michele Fischer · Answer

Agree with others that I would choose the SFH.

SFH has two exit strategies, sell to an investor or to an occupied owner.  Multi will only attract an investor.

SFH will have less maintenance, wear and tear, and headaches.  SFH renters will expect to move their lawn, shovel their driveways, and are further from other neighbors that they can't get along with.

Billy Daniel · Answer

I would probably choose the SFH simply because you can sell them off one by one if needed.  More options for exit strategies!

Eugene Fedotov · Answer

I would go w 4plex. It is 1 roof, 1 sewer line, 1 closing cost, 1 mortgage, tax and insurance (cuts down on time), easier to find management company and 1 LLC.

Jason Maguire · Answer

I prefer multi-family as i do believe they are easier management wise & having everything central at one location (one roof, not four, etc)- but i think @Luka Milicevic makes some very valid points about SFH.

Usually, lot less turnover & tenants seem to generally take care of the properties better, ultimately keeping your expenses lower than maybe a Quadplex. Kind of a toss up and up to one's preference! Solid thread.

Conner Olsen · Answer

If cash flow were similar then I'd consider which would appreciate more? All else equal I'd assume SFH.

Bruce Woodruff · Answer

Thanks! I asked this not only as a rhetorical question sorta, but I'm actually looking to take some equity out my current properties that are free and clear and get more RE assets when prices drop....

Interesting thoughts....

4 unit Apt vs 4 SFHs?

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