Single family vs multi-family

19 Replies

So been watching a lot of Grant Cardone, and I understand the logic behind multi units vs single family. But, my question is; can having multi single family also work similar to having one big multi unit? I have one unit and I am trying to get more but I don’t have hundreds or thousands of dollars to pay for a multi unit right now. Can I get a few single family and build from there? Any and all input is greatly recommended!

@Jamaar Brown you definitely can scale up by going into partnership with LLC who has a proven track record by being a GP on the deals or a capital raiser, depending what you can bring to the table, check out "Best Ever Apartment Syndication Book" for more in depth content.

The single family/multi family debate will continue forever. Some gravitate to one or the other. They both have their pluses and minuses. I've considered but never purchased a small multi-family but have no inclination to own a commercial property. We make our living off single family homes. Some have both.

@John Teachout yea that’s exactly what I was thinking. My current property has been occupied for years. I treat the tenates well and they always out in time and have no issues. Now I know it won’t always be like that, but I think 4-5 single family house can give me the same effect as multi. I just want some passive income now make this my everyday job.

Do you have any experience with vendee loans?

We haven't been able to find a multifamily property that meets our criteria in our market. As soon as you add a single additional unit to the property, the prices shoot up and the rents shoot down. Until that changes, we'll be sticking to SFHs. 

You can absolutely scale up with SFH. Multifamily almost never come up in my market at least duplex, triplex, etc and most cities aren't allowing them to be built near me. Apartment buildings come to market here and there, but the numbers don't make sense for me to buy.

Buy something that needs a little work, fix it up, rent it out, refinance or get a HELOC. Use that as a down payment on the next one. Rinse and repeat. I don't see any reason you couldn't buy a property at least every 2 years using this method.

It's very important to run those numbers first to make sure it makes sense.  If the numbers do make sense make sure you have a good understanding of what the rehab costs will be.  Things like a roof, air conditioner will run you big money.  Long term if you make the unit nice now and fix those things right away you should have little upkeep costs provided you have good tenants.  One of the things I do right away is replace the water heater and water softener if they are older than 7 years.  After having one leak out of the bottom and flood the basement I now don't take that chance.

If you get enough SFH you can definitely trade up with a 1031 exchange for a Multi family.

@Jamaar Brown

If you are passionate about doing SFR than do that. They are all different ways to invest, and you guys've to do what works for you and your family. a SFR only requires 15% down versus a MFR 25% with conventional investment properties.

@Brent Paul you are absolutely correct. In the area will I will be moving it’s mostly townhouses. Not many multi units come up for sell. I want to make some money but not tie myself into the situation where I am doing it 24/7.

@Jamaar Brown : both work.

The difference comes down to your intentions. How you value and exit a MF is different but they both are passive income regardless. Some investors prefer to reposition a distressed asset, which MF could be the right choice. If you're looking for long-term buy & hold then I wouldn't be discouraged about owning SFR instead. It serves the same purpose of getting your money to work 24/7.

@Jamaar Brown Everyone has to start somewhere as long as you get to your destination. One of the reasons I love multifamily is the risk-aversion of having multiple doors under one roof. As one tenant vacates your are stuck with the mortgage at 100% occupancy. Also, one big ticket item like an HVAC repair, etc can potentially wipe out your cashflow for the year. Maybe you can look at 2-4 units? In my opinion, those can be sleepers for cashflow in certain markets. 

@Jamaar Brown - I also focus on single family in Hampton Roads.  I have a few duplexes, but find that SFRs are easier to find and easier to finance. Right now our multis are selling at a lower cap rate than the investors I know can ever remember.  Come join us at the Hampton Roads Landlord Association some time!  We have a great group of like minded folks who share ideas, strategies, mistakes, and knowledge at a monthly lunch & learn.  Just google it and you can find a link.

YES! It’s my favorite meeting of the month. We had a really fun meeting this month where we had a home inspector meet us at a property and teach us things to look for. Look back at the history of our past meetings to see the kinds of topics we address. It’s an all volunteer club and we’ve been able to keep it free by holding it at a venue that gives us free space if our members pay for food. I’ve tried to schedule it at a non-food venue and no one wants to. Breaking bread together is part of what the group loves.  Come join us!