Single family in the middle of multifamiily - Good or bad

[Ranga Ramanathan]

I am working on closing a Single Family Residence (SFR), I am getting a decent enough deal and numbers work even for a conservative rent value. I am paying about 10% below average for the area probably because this property is in a block where on one side are duplexes other side is another single family, dead end and a nice park, opposite side is full of 6-8 unit multifamily rentals. In fact this property is a stone throw away from one of my other investment property that I have had for little less than two year and working out great. This is a B+ suburb of Milwaukee, with good schools and low crime.

My questions are

1) Will there be a decrease in rent due to the location of this SFR other factors being equal?

2) Will there be a problem getting rid of this home if want to, is there a standard percentage cut in home value that makes sense for this situation?

Thanks for reading my post.

[Thomas S.]

The home will be worth less due to the fact that the primary buyer will be a investor, like yourself, as opposed to a home buyer. This property is destined to likely be a rental and priced accordingly. "Accordingly" means that the home will need to be evaluated solely based on rental income in my opinion. I would assess it's value based on a similar size/similar rent as a duplex or other rental in the area. Cap rate.

If I were buying I would not give any credence to it being a SFH because the base "home buyer" mentality simply will not exist and therefor not generate the higher prices emotional home buyers bring to a SFH..