All Forum Posts by: Charles M.

For 1-4 unit properties, I am hearing that appraisers lean almost entirely on comparable sales—basically treating a 4-plex like a single-family home. If that's true, any boost in NOI I create (higher rents, value-add renovations, better management, etc.) won't meaningfully increase the appraised value because the sale price still rides on neighborhood comps.

Am I missing something? I don't want to sink cash into a 4-plex, drive up NOI, and then find out the exit price is capped by the same comp set as a tired, under-rented building next door. How have other investors navigated this?

Where I am hearing this:

1. Here is a YouTube vid covering this topic >>

;list=PLiGkEdIjg0dc3X70H1JOyYfOS6i4qzAaj&index=4

2. Chat GPT

Prompt Question I asked: are residential a less effective way to build wealth that 5+ mulitfamily

ChatGPT said:

Yes, residential (2–4 unit) properties are generally a less effective way to build long-term wealth compared to 5+ unit multifamily—especially if your strategy is centered around forced appreciation, scalability, and building a portfolio with high equity growth potential.

Here’s why 5+ units are more powerful for wealth-building:

✅ 1. You Control the Value (Not the Market)

• 5+ Units: Value is based on NOI and cap rate. If you raise rents or reduce expenses, you increase the value directly.
• 2–4 Units: Value is based on comparable sales, not performance. Even a fully optimized 4-plex could appraise the same as a poorly run one down the street.

Wealth Impact:
You can manufacture equity in 5+ units. In 2–4 units, you’re at the mercy of comps.

✅ 2. Scalability and Institutional Appeal

• 5+ Units: Scale into larger buildings. Eventually appeal to syndicates, REITs, or institutional buyers who pay top dollar for stabilized assets.
• 2–4 Units: Smaller buyer pool, less scalability, mostly mom-and-pop investors.

Wealth Impact:
Your exit options are bigger and more lucrative with commercial multifamily.

✅ 3. Refinance Power (BRRRR-style)

• 5+ Units: Can refinance based on new NOI, unlocking huge equity gains tax-free.
• 2–4 Units: Refinance capped by appraisal comps even if cash flow improves.

Wealth Impact:
5+ units let you pull out equity faster and recycle capital for new deals.

✅ 4. Lending Leverage

• 5+ Units: Lenders lend on the asset's performance. As your team grows, you can get 8-figure portfolios underwritten based on NOI and DSCR.
• 2–4 Units: Still tied to your personal credit and income ratios unless using DSCR loans, which still fall under residential lending caps.

Wealth Impact:
You get access to more capital, faster with commercial lending structures.

✅ 5. Professional Operations and Cost Efficiencies

• 5+ Units: Easier to justify full-time management, maintenance, and CapEx systems.
• 2–4 Units: Often owner-managed, which limits your ability to scale operations.

Wealth Impact:
Commercial ops make it easier to go from real estate investor to business owner.

The Only Case for 2–4 Units:

• House hacking / FHA / Low-money-down start
• Live in one unit, rent the others
• Building credit and experience
• Lower risk, easier entry, but slower wealth-building.

Looking for multi family around 10 to 15 units.

Requirement: Looking for an agent that has cash flow apartment experience as an agent as well as having their own personal rental portfolio.

To Apply: message me a bit of info about yourself.

Haha, your analogies hit the nail on the head! It's like everyone wants the five-star meal without paying the price or even tipping the chef. It's a wild world where the expectation is to get premium service while offering peanuts in return. 

Maybe it's time to remind these folks that quality, expertise, and convenience come at a cost. If they're looking to play in the real estate game without investing in the process, they might as well stick to Monopoly. Keep standing your ground and valuing your work; there are still people out there who recognize and respect the grind. Cheers to finding them and to your continued success!

Hi, I have a tenant who owes me but is going to leave tomorrow and has not paid me. 

What are the legal rules about what papers I need to give this person about what is owned, how long to wait to be paid before I can start a a small claims lawsuit and anything else I should know about how to handle this the correct legal way?

@Alyssa Dyer What price point (and any other factor) do you consider a A, B and C property? 

Thanks for the advice and blog post. I agree. I feel like focusing on one property and paying it down/off is more of a middle class get out of debt/all debt is evil move that my family is advising instead of multiplying and building more wealth. It cash flows very nicely now as is. 

Hi I am looking for advise, I am having a hard time weighing out these two options and making a decision. 

Option 1 - 15 yr loan
refi my current 230K 4.375% 30 yr loan by putting in 70K and getting a 160K 15yr loan at 2.8 apr. 
This lowers my monthly by $100 and pays my mortgage off 25 years faster (im 5 yrs into my current) and I would save 100K on interest payments

Option 2 - get rental #2 
refi at 230K at 3.5 apr and have 70K cash (and growing) ready to buy another rental or two when prices fall.
This keeps my mortgage the same, just lowers my monthly payment by $200. 
It seems like a bubble right now and in a few years It would be a good time to get a second rental

My objective here is too make the smartest/most logical move and build wealth, not to proudly say I have (only) 1 rental that is paid off, which my family is advising to do.

Although I like the idea of a 15 year, id hate to miss out on a future fall in prices/implosion because I didn't have free'd up cash, which I think is coming in possibly a few years.