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Treivor Cashion
  • Dallas, TX
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Small Multi-Family units - what's your experience?

Treivor Cashion
  • Dallas, TX
Posted Dec 26 2017, 19:17

Merry Christmas to all you wonderful people and hope y'all have a great New Years as well! Question from a newbie investor...

I've listened and read quite a bit on small MF units (2-4 units) and the prospect of higher cash flow and the ability to house hack sounds great to me as a beginning investor just starting out. However, I met with an investor that I connected with here on BP this past week and he brought up some really interesting points that I hadn't really thought about - specifically, that small multifamily properties can be more of a management hassle since tenants can butt heads. What happens when Larry parks on Sally's side of the drive way or one tenant blares music while the other likes a more quiet environment? While I do think that good tenant screening has a lot to do with solving this type of issue, people still can get on each others nerves for whatever reason and in the long term this could (in my mind) jeopardize the likelihood of repeat residency and could just be an overall headache that no amount of tenant screening could solve. 

Also, when it comes to an exit strategy, small multifamily properties are generally bought and sold between investors instead of an average Joe looking to buy a house who is more willing to buy that property for it's emotional appeal rather than how good of a cash flow they can receive from it. Therefore, the likelihood of selling it to someone for a favorable price is much slimmer and the margins are much tighter than compared to SFRs, at least at first glance.

So I guess what I'm asking is, what is your experience with small multi-family properties and have you dealt with issues like this before? Is there something that I missed or more things that I should consider with these types of properties? As much as I want to get on the hype train with these property types, I want to make sure that I get all the angles, both good and bad. 

Any and all advice and insight into this is greatly appreciated from this newbie investor :) thanks all!

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