I have owned SFH rental and thinking to try multi. Is it a good idea? For the same $600,000, I can either get:
(A) Two SFH and each rent for $1,600. Or,
(B) One 4-unit apartments building each rent for $1,000.
Cash flow from multi is higher, but would take more time to manage tenants? SFH values upside is bigger? It is in the Southern California Inland Empire.
@Jeff Low MF is overpriced in SoCal right now. It would be very hard for you to get a 7% cap rate on multi-family, even in San Bernardino, California. My suggestion would be to purchase some single-family homes at a discount, do any necessary rehab work, and then rent them out. You'll build equity into the house and you'll get higher rents with the improved property. You won't appreciate on multi-family unless you can decrease the vacancy or get improved tenants paying a higher rent. With single family appreciation will happen over time. if you are using cash to purchase these investment properties you really need to be buying them at a discount. Otherwise, your cash on cash return will abyssmal in Southern California. single family is a little bit harder to manage, but if you have a good property manager you shouldn't have a problem. If you are interested in investing in the Inland Empire, shoot me a private message.
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