BRRRR MFH's vs Apartment Bldg.

[Account Closed]

I have a few small MFH's and am considering two options for my next purchase. The BRRRR strategy for small MFH's is appealing as I see the following:

Pros

• recoup my capital (after seasoning)
• good monthly cashflow ( I've been averaging $250/door with conservative numbers for expenses)

Cons

• Takes a bit longer to reach my cashflow goal ($5k/month) -- 20 units (5 quads)
• smaller economies of scale (i.e., need different PM's if different area, more insurance policies, more P&L to review)
• similar risks as a fix-n-flip (budget creep with rehab, appraisal is lower at refi time, holding costs)

Alternatively, small apartment buildings (up to 24 units) are also appealing. I see the following benefits:

Pros

• larger economies of scale
• value of property can be increased by increasing NOI (and usually not dictated by comps)
•  potential profit if the bldg. is a value-add opportunity

Cons

• more expensive (need more personal capital or need to have private investor/syndicate). 
• cash flow/unit appears to lower (i've seen several posts that mention $100/unit

The above pros and cons are just my assumptions. Anyone here contemplated this same thing? I'd love to hear the thoughts of the community.

[Jeff Copeland]

You also have to factor in the differences in financing. 

A quad can still qualify for up to 30 year fixed-rate residential financing, which, at the very least, makes your P&I a fixed, stable cost. 

Commercial financing is a different animal altogether, and may require higher down payments, higher interest rates, shorter amortization periods, and more interest rate risk.