Should I expand my search from 2-4 units to single family?

Question

I've been looking for my first investment property for 4-5 months now. I've put in a few offers, but been unsuccessful so far. I have been looking for 2-4 unit properties for the same reason everyone is, but mainly for me is the security of multiple rent checks coming in. I just got outbid on a triplex, and I'm getting discouraged. I'm considering looking for single family just to get started, as I know that's an important part of getting started (you know, actually getting started). All of that said, I'm starting to feel like building a portfolio of 3-4 single family homes is similar to having a 2-4 unit property. What are everyone's thoughts on this?

I'm in St. Petersburg, FL, looking in the St. Pete, Tampa, Clearwater, FL area; looking to BRRRR.

I'm in St. Petersburg, FL, looking in the St. Pete, Tampa, Clearwater, FL area; looking to BRRRR.

Isabella White · Answer

I know this feeling! Don't get discouraged. The St. Petersburg FL market is nuts right now. It seems that MF are being sold for their asking price, often in cash, often less than 24 hours post listing. Don't rush into a deal out of desperation...  I found myself in that head-space and almost made a bad decision on a home that ended up needing an 80k foundation repair, and a lot of people found themselves in that head-space in 2007. Make sure to prioritize the objective: the numbers, the returns, the cap rates, etc. The opportunity that is meant for you will present itself eventually.

Good luck!!

Anthony Gayden · Answer

When I started investing, I wanted my sole focus to be on buying small multi-family properties. I found that as time passed they became harder and harder to find. Eventually I realized that I was either going to have to switch strategies or switch markets. I chose to switch strategies and began investing in single family rentals instead.

Austin Steed · Answer

@Matt Ashbrook

I would stay persistent with MF search.

The returns that you see on MF is so much more handsome. At least in Columbus OH that is.

Maybe start looking for off market deals?

The last double that I purchased was off market and I called the owner directly. I am a Full time agent in Columbus OH but this deal was done with no agents involved.

Also you can only have 10 Fannie and Freddy loans, from my understanding. So do you really only want 10 units?

Patryk Sommer · Answer

@Matt Ashbrook hey Matt, i definitely understand your struggle it took me the majority of 2019 to find a property I could house hack, due to the limited inventory we have of multi family properties in Pinellas I was constantly getting beat on offers or they would get snatched within 24 hours but I was able to find a triplex in Clearwater for less than 100k a door so keep looking a great deal is out there!

Marelyn Valdes · Answer

I am also in Ocala (moved from Tampa in 2003) and I buy SFH's and MH's only.  They are responsible for their own lawn maintenance, garbage, all utilities, and bugs (rodents are landlord's responsibility).   They are not fighting with neighbors with shared walls and I don't have to intervene.  If I need fast cash for any reason, I can sell a SFH in 60 days at most, while a multi-family may take longer.  Most people prefer renting a detached house to a multifamily and pay more per month for the same sized property.  I just got a MH under contract for $25,000 on a 1/4 acre lot with the additional lot next door.  It needs rehab, but will easily rent for a minimum of $650 - $700 a month (2/2) and I have the extra lot being listed for sale as soon as I close on the property.

Mary K. · Answer

@Matt Ashbrook you could also consider other surrounding areas that are growing, like Sumter/Lake/Marion counties, Gainesville (where UF is), etc. I am in Ocala and we are a hot spot for investors right now too but its still doable to buy here and cash flow. There are a lot of new jobs/companies in our area plus people here commute to both Tampa and Orlando.

Austin Steed · Answer

@Matt Ashbrook Agreed! And you are right if the numbers work on a SFH then the number work.

Best!

Calvin Ozanick · Answer

I am in the same boat right now. I have expanded my search because I am not picky. Here in Wisconsin, our multi-family inventory is so sought after that these deals do not last more than a few days in some instances.

Elise Marquette · Answer

@Matt Ashbrook I’m in the Tampa Bay Area as well and it is freaking tough to find a multi. Keep at it- are you working with a realtor who works in multi families? I know a few that may be able to help you out

Brett Baginski · Answer

Hey Matt...  I was in a similar situation as you and I stopped looking for the multifamily and bought a single family.  In my situation, I felt the sooner I got started, the better.  I spent about 4 months looking at multifamily properties in NJ with no luck.  Once I switched my focus to single family, I had a property under contract in about a month.  Took me 1.5 months to rehab and rent out and now I am cash flowing.  If I stuck to multifamily I may have never gotten started.

This is just my experience in a market completely different than yours.  NJ requires a lot of capital to get into the multifamily space so that limited my options.  If you are dead set on multifamily, maybe try rethinking your strategy.  Would you be able to live in one of the units?  You could come up with a much lower down payment occupying the unit rather than going in as an investor.  Have you tried mailing to the multifamily properties in your area?  Might have to get creative.

Should I expand my search from 2-4 units to single family?

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