Multi-family question -- Small or Big to begin --

[Dan Grodnik]

As a first time investor, I've read a couple of books Turner recommended. Author Loftis says I should invest in duplexes, trips and quads. Ken McElroy says I should set my sights higher from the beginning. I'd appreciate a few suggestions as to which way to begin.

Thanks,

Dan

[Account Closed]

@Dan Grodnik There's nothing wrong with setting your sights high from the beginning, but I would highly advise against jumping straight into a big deal for the following reasons:

1) Financial Risk - The larger the investment property, the larger chance for financial loss, especially with no experience.  Your first few deals should allow you time to figure out a process that works for yourself and decide if real estate is really something that you want to pursue.  

2) Landlording - Jumping straight in to a 10-20 unit property may sound flashy, but if you find out being a landlord isn't for you, you'll either fail to properly screen reliable tenants (because there are just so many and you don't have a good system ), or you'll have to pay a lot of $ out of pocket for a Property Management company to do so.  This would cut into your cash flow heavily.

3) No Experience - I think it comes down to the fact that you should build knowledge and experience before you begin investing.  To compare, I wouldn't make my first stock market a $400,000 trade in one company....I would spread out $20,000 into 10 companies and get the feel of things.

Hope this helped a bit!

[Dan Grodnik]

Thank you Marshall for your grounded and insightful response to my question. I really appreciate your taking the time to explain your reasoning and, more importantly, I'm going to follow your advice.