Single Or Multi Family?

12 Replies

Is it smarter to invest in a single or multi family home for my first investment?

It really depends on your investment goals. I strongly believe you should start with at least one SFH before going multi family. You will learn a lot. Like anything else, they both have their pros and cons.

My 1st deal was a duplex,

I know a multi millionaire investor out here whose 1st deal was a 14 unit apartment building.

Many people say to start with a single. I say start with the best available deal to you.

Singles are the easiest to manage but for every pro there is a con.

All depends on your area and the acquisition prices for each... Here in South FL, multi-family properties are VERY OVERPRICED so I would stay away from them unless you get a very motivated seller or one in a lot of need of work.. As a newbie investor, going with SFH or even a condo in a very investor-friendly HOA, if one exists in your area..

Originally posted by @Edward Geyer:

Is it smarter to invest in a single or multi family home for my first investment?

 YES!.... is the simple answer.  Whichever you can find the best deal on.  My 1st was a single family I lived in w/ a roommate to help cover mortgage.  I sold that 2 years later and bought another single family to live in and a 5 unit with the appreciation.  

If you are young and just getting started out, I feel a owner occupied 2-4 unit is a great way to start.  If you buy right, you can have your tenants pay your mortgage and some expenses.  

The most important thing to do is get started.  Today would be good, yesterday would have been better, but tomorrow will do.

Thank you all for getting back to me I'm 19 and just got started learning about real estate and you guys made it a whole lot easier to understand the process i appreciate your time so much it means alot

@Edward Geyer where you start is up to you and up to your ability to learn, not to mention the amount of money you have to invest.

I started with a 4 plex, and it isn't nearly as hard as a lot of people on here seem to think. Perhaps it is because I had plans and systems in place from the beginning. 

Also I like the advice from @James Wise . I have mentioned before that I have a friend who started with a trailer park with more than 50 units. He struggled a little at first, but figured it out after a short time.

Multifamily market is way overpriced and overbuilt in my area.  Even with 2% deals which I hardly ever see on multifamily I'm still hesitant because of the amount of competition and offerings from large high end complexes owned by institutional investors that are satisfied with 6-7 cap rate properties.

2% deal on SFR are hard to find, but it gives me time to save up and avoid long term leverage on my rentals. I'm happy with the pace for which I've been able to accumulate properties at this time.

There's a large demand for SFR rentals as many people just get sick and tired of neighbors surrounding them side-to-side top-to-bottom.

Then there's the benefit of having appreciation not being solely tied to rental rates.  Not having to rely solely on investors when it comes time to cash out, and not having all your eggs in one basket/market.

SFR allows me to have properties in different job markets, different school districts, and different neighborhoods all while being within in a 20 mile radius of my home. That's hard to mimic with multi.

All that said, if a great multi deal presents itself I'll be on it like white on rice...

SFH tenant moves income

Duplex tenant moves out ...1/2 income

what can  you afford?

Originally posted by @Gerry Kielman:

SFH tenant moves income

Duplex tenant moves out ...1/2 income

what can  you afford?

That's assuming a duplex and a SFR home cost the same. If that's the best your market has to offer then I'd probably go duplex also. I'm generally able to have the same price per door invested in SFR properties as most duplexes in my market.

We also have a kinda funky duplex market here.  Most are located in these duplex only subdivisions/developments where one original group or investor went in and built 15 or so duplexes.  At some point they decide to break them up and sell off individual units..

The result is a hodgepodge of different owners and management practices.  They tend to be built right on top of one another and eventually it all gets kind dumpy.   Tenants become scarce, some drop rates,  defer maintenance, and others enroll in section 8...  

This may be a unique situation in my market.

In my opinion, if you are planning to commit, go for it all. I think multi family will allow you to pick up your pace to even learn more. Do all this within reasonable means. 

I agree with others who said to get a 2 to 4 unit property, live in one unit, and rent out the rest. That is what we wish we had done. I do not see the advantage of starting with a SFR as your first investment vs a multi.

I'm another vote for whatever the market dictates. At the end of the day, you're trying to make money, and if you can handle one, you can handle the other.

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