Single Family Residences for Buy and Hold.

[Jonathan Farris]

Why would anyone B&H on a SFR? Is it like... the end result of a BRRRR?

It just doesn't make any sense to me. SFR, I think flip. MFU I think B&H.

Obviously every deal is unique, so this is not as simple as stated.

If I am B&H I want the biggest building with the most rents I can afford.

The "why?" is simple: Repairs, Maintenance, Drive Time, Synergy, Closing Costs

I am in the process of buying an 11 unit building. If I bought 11 individual units (or even a few different 3 or 4s) I would pay 3 to 11 times the closing costs. I would have 3 to 11 buildings to maintain instead of 1. I would have to drive to the various locations to fix things, and do rent collections/evictions/etc. With bigger buildings, you typically have some kind of set layout, instead of all these cut up 1/2/3/4/5 units, decreasing repair costs/time.  

Also, occupancy on SFR is 0% or 100%, where you have middle ground on MFU's.

Obviously I am not enamored with the idea of paying 8-10% of rents to a PM, so maybe these guys are just pay someone to do it? Wouldn't that eat up all (if not more) of cash flow?

I also get that buying a bigger complex is more cash intensive, but if you are going to B&H, I think starting with SFR is a mistake!

Let me know how you feel!

[Thomas S.]

SFH investors operate on a different business plan. They fear large scale and justify individual SFHs by compartmentalise their investments.

They are also less concerned with cash flow and are more likely to speculate on appreciation. They are much more conservative investors believing a SFH is somehow easier to manage and easier to unload when necessary. They are often the type of investor that lacks a full understanding of the value of money and concentrate on parking their cash in a rental property. They are less interested in making money and more interested in saving money for some day in the distant and undetermined future.

Impossible for me to get my head around the "income investment" aspect in their strategy.

All only my personal opinions based on the SFH owners I know.