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Gladys Cepeda
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Multifamily vs. Couple of single homes

Gladys Cepeda
Posted Apr 7 2024, 04:34

Hey investors!! What's your take/advice? Need advice as I am embarking in purchasing my first rental property. 

Is it better to invest in one 3-4 unit multi family first or 2-3 cheaper single family homes? 

what would u say is a good percentage cash flow amount??

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Mathew Pezon
Pro Member
  • Rental Property Investor
  • Allentown, PA
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Mathew Pezon
Pro Member
  • Rental Property Investor
  • Allentown, PA
Replied Apr 7 2024, 06:02
Quote from @Gladys Cepeda:

Hey investors!! What's your take/advice? Need advice as I am embarking in purchasing my first rental property. 

Is it better to invest in one 3-4 unit multi family first or 2-3 cheaper single family homes? 

what would u say is a good percentage cash flow amount??

Hey Gladys,

Jumping into real estate investing is an exciting step, and it's awesome you're weighing your options carefully. Between multifamily units and single-family homes, the best choice really hinges on aligning with your financial goals and investment strategy.

Multifamily properties can be a great kickstart, offering the convenience of managing all your units in one location. This could mean a steadier income flow, especially since vacancies in one unit don't leave you without any income. Yet, the initial investment might be heftier, and the management could be more complex given you're dealing with more tenants under one roof.

On the other hand, single-family homes might spread out your risk and potentially cater to longer-term tenants, promising less frequent turnovers. Managing multiple properties does come with its own set of challenges, like juggling different maintenance issues, taxes, and possibly even varying market conditions if they're not all in the same area.

Here's where your financial goals come into play: Are you looking for a more hands-on investment with potentially higher cash flow from the get-go? A multifamily unit in Providence might be your answer. Or, do you prefer a more diversified approach, possibly aiming for long-term appreciation and stability? Then, several single-family homes could fit the bill.

Aiming for a cash-on-cash return of about 8% or higher is a solid baseline, but remember, this can fluctuate based on many factors including your specific market. Ultimately, the decision should mirror your financial ambitions, how actively you're looking to manage your portfolio, and your risk tolerance level.

Take some time to reflect on what you hope to achieve with this investment. Whether it's building wealth over time, generating immediate cash flow, or a mix of both, let your financial goals guide your choice.

All the best in making a decision that aligns with your vision for the future!


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Allan C.
  • Rental Property Investor
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Allan C.
  • Rental Property Investor
Replied Apr 7 2024, 12:47

@Gladys Cepeda there are merits and trade-offs to both approach. I prefer multifamily because you have more control over future asset valuation.

SFH you are more beholden to comps when you ultimately plan to exit. Smaller MF may start with comps, but ultimately NOI will drive asset valuation. You have control over NOI with both opex reduction efforts and revenue enhancements.

The real question is how active you want to be with your investment.

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Jacopo Iasiello
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Jacopo Iasiello
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  • Miami Beach, FL
Replied Apr 8 2024, 11:02

The best choice depends on your investment strategy, risk tolerance, and long-term objectives. Consider consulting with a real estate professional or financial advisor who can provide personalized guidance based on your specific situation and goals.

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Gladys Cepeda
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Gladys Cepeda
Replied Apr 10 2024, 15:50
Quote from @Jacopo Iasiello:

The best choice depends on your investment strategy, risk tolerance, and long-term objectives. Consider consulting with a real estate professional or financial advisor who can provide personalized guidance based on your specific situation and goals.

Thank you so much for your advice

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Gladys Cepeda
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Gladys Cepeda
Replied Apr 10 2024, 17:17
Quote from @Mathew Pezon:
Quote from @Gladys Cepeda:

Hey investors!! What's your take/advice? Need advice as I am embarking in purchasing my first rental property. 

Is it better to invest in one 3-4 unit multi family first or 2-3 cheaper single family homes? 

what would u say is a good percentage cash flow amount??

Hey Gladys,

Jumping into real estate investing is an exciting step, and it's awesome you're weighing your options carefully. Between multifamily units and single-family homes, the best choice really hinges on aligning with your financial goals and investment strategy.

Multifamily properties can be a great kickstart, offering the convenience of managing all your units in one location. This could mean a steadier income flow, especially since vacancies in one unit don't leave you without any income. Yet, the initial investment might be heftier, and the management could be more complex given you're dealing with more tenants under one roof.

On the other hand, single-family homes might spread out your risk and potentially cater to longer-term tenants, promising less frequent turnovers. Managing multiple properties does come with its own set of challenges, like juggling different maintenance issues, taxes, and possibly even varying market conditions if they're not all in the same area.

Here's where your financial goals come into play: Are you looking for a more hands-on investment with potentially higher cash flow from the get-go? A multifamily unit in Providence might be your answer. Or, do you prefer a more diversified approach, possibly aiming for long-term appreciation and stability? Then, several single-family homes could fit the bill.

Aiming for a cash-on-cash return of about 8% or higher is a solid baseline, but remember, this can fluctuate based on many factors including your specific market. Ultimately, the decision should mirror your financial ambitions, how actively you're looking to manage your portfolio, and your risk tolerance level.

Take some time to reflect on what you hope to achieve with this investment. Whether it's building wealth over time, generating immediate cash flow, or a mix of both, let your financial goals guide your choice.

All the best in making a decision that aligns with your vision for the future!



 This is such great advice. Thank u for taking out the time to respond so thoughtfully. I actually am looking at RI properties and the multi families are really moving so quickly you have to make quick decisions because they leave the market in a few days. But im still looking and hopeful. Also we were looking into PA homes in Lehigh valley. Do you know if the market there is good since you are from there? Thanks so much

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Ian Halter
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Ian Halter
  • Investor
Replied Apr 11 2024, 07:45

@Gladys Cepeda I highly recommend the Starting Out Forum or the First-Time Home Buyer Forum to read other people's similar questions and learn through the advice they received. The reason for this is that beyond financial analysis - risk and preference of asset classes can be a personal decision; people sharing their stories and journeys becomes a useful perspective. 

Before hiring a professional and paying for advice, I would continue to do research here and use the advice that's free. Best of luck in your journey!