What surprised you most when moving from single-family to multifamily investing?

Question

One thing I like about multifamily is that a vacancy doesn’t wipe out all your rental income. The other units help carry the property. But you also have shared expenses to account for—landscaping, common-area electricity, and water are often paid by the owner. Those costs add up and need to be in your underwriting.

What was the biggest adjustment for you—financing, management, shared expenses, or something else?

Denise Supplee · Answer

For me, one of the biggest things to pay attention to is the shared expenses. It's easy to look at the rents and think the numbers work, but once you add water, common utilities, landscaping, maintenance and everything else the owner is responsible for, it can change pretty quickly. I like looking at the property's actual expenses whenever possible instead of relying on estimates. Those little expenses have a way of adding up.

Matthew Morrow · Answer

@Andrew Freed for me it was the mixed-use piece. My first big rental had a commercial space along with the apartments, and that tenant thought about the space, the lease, and repairs a lot differently than a residential tenant does. The shared costs you mentioned caught me too. Water and common electric add up, and on older buildings the utilities aren't always split the way you'd like. Curious to hear what others say.

Inder Singh · Answer

My path mirrors this — started with a single unit in Revere in 2020, then Worcester 3-families in 2021 and 2024, a 4-unit this year, and a 6-unit in Warren. The surprise that hit my underwriting hardest was owner-paid water and sewer plus common-area costs on older multis — line items that simply don't exist with a single-family. Second was the mindset flip: one vacancy in a 3-family is a third of your income, not all of it, but you also stop knowing every tenant personally and need systems instead — consistent screening, maintenance tracking, reserves per unit. Vacancy stopped being an emergency and became a budget line. Happy to connect with others making the same jump.

John Leland · Answer

I've been through a few downturns over the last 30 odd years. In asset protection during down years, it's better to be able to sacrifice one house and keep the others than to have to lose the entire project. In chess, sometimes you sacrifice the rook to save the King. It doesn't work to sacrifice the king to save the rook.

Look at your assts and know which one needs to go if things get tough. I think we're headed for a "correction".

We teach our people to ladder their holdings. You don’t want to be in a position where your exposure is your entire asset.

Levi Rawlings · Answer

Greg and Denise have covered management and shared expenses, so I'd add the adjustment that changes how you think about value. A single-family home is mostly priced off comparable sales. Once you get to five or more units, buyers and lenders largely price the building off its net operating income, so every recurring expense the owner carries comes out of value, not just cash flow.

That makes Denise's point about actual expenses even more important, especially in older New England buildings, where owner-paid heat and hot water are common. Before buying, get the last 12 to 24 months of utility bills rather than the seller's estimate, and price what it would cost to meter or shift those utilities to tenants over time. Some of the best value-add in older multifamily isn't in the units at all. It's turning an owner-paid expense into a tenant-paid one, where the leases and local rules allow it.

Greg Scott · Answer

For me the biggest change was resident management.

Managing single family was simpler. You have a resident in a house. Everyone knows who is responsible for what. Also, for equivalent submarkets, rents in single family tend to be higher, so incomes tend to be a little higher. It may just be my perception, but they seem to be more responsible.

In multifamily, managing the people is much harder.

• Things get broken in common areas and you have no idea why
• Who left that large couch next to the dumpster?
• "My neighbor's cooking smells bad"
• Domestic disputes that become violent.
• etc. etc

Things get broken in common areas and you have no idea why

Who left that large couch next to the dumpster?

"My neighbor's cooking smells bad"

Domestic disputes that become violent.

etc. etc

What surprised you most when moving from single-family to multifamily investing?

What surprised you most when moving from single-family to multifamily investing?

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