SFR or Multi Family?

[Sam Mudro]

Looking for my first investment in the DFW area and wondering based upon people with experience if I should start with a SFR or a multi-family property? Also what is the best way to finance these types of deals?

[Tom Yung]

It all boils down to YOU personally.

1) funding

How much cash, credit level, trust level by other people if syndication.

amount that you can get your hands on funds from all sources.

2) RE experience & knowledge

How knowledgeable are you with Real estate in general & your market condition.

That includes all potential development in the future for that market. It is very hard to say one BIG area like DFW. It breaks down by areas of town.

3) contacts & ground crew

Who do you know? sometimes it makes a big difference in Commercial deals.

Most times the cap are compressed so much on the listing that it is very little profit for the new owner. SFH is more direct, it compares same type of properties in the same neighborhood. Appraisal is also different between commercial & residential. Financing are totally different & sometimes property management can be different too. Don't forget inspection(due diligence), they are very different too.

4) expedition of return

Because of the economics of scale , commercial may have a little advantage over residential on expenses. But with today's market, You can sometimes pick up SFH under 60K for $900/ month rent. Too many people are jumping into multi now. The cap are really compressed.

Also look at Exit strategy, multi are cater to a specific group of investors.

while SFH is a lot easier to change hand than multi.

5) level of involvement

Are you going to do all work on your real estate business; or are you totally involved in running the business. Even when you have a property manager,

you still have to learn how to manage the manager.

The above are my 2 cents.