Slow and Steady or Fast and Big

Slow and Steady or Fast and Big

Gerrardstown, WV · Member since 2016 · 7 posts · 11 votes

Is it a better strategy to sell my SFRs in order to finance 20+ unit properties, or to slowly build a portfolio before making the big jump to large multifamily properties?

Hello everyone,

I have a SFR that is completely paid off and I now have a great tenant. I have been looking high and low for another good rental property but have been contemplating if I should focus on multi-family properties. My initial plan was to acquire five SFR and get pay them off. At that point I would focus on getting into multifamily, specifically 20 units or more. At this point, should I run into problems with the large multi-family unit the income from my SFRs could cover the difference. Therefore, I would not be putting myself in a position where I'm risking my personal financing and the potential go bankrupt. However, I watch podcasts, such as Grant Cardone, and have read a few other articles that suggest I should sell my SFR and go directly for the 20+ unit properties. What do some of you more experienced investors believe to be the better strategy? After looking at nearly 100 deals and having made a few offers, which were not accepted, I've come to the realization that even if I were to get an extraordinary deal on a SFR I will be hard pressed to make even an 8% return. There are a few "fairly secure" stocks out there that pay 6.8% dividends which is making me a little discouraged in the SFR realm. Keep in mind I have a full-time job and do not intend to manage properties personally. Thank you in advance for any advice/comments. Have a great day

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  • Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    @Richard Talbott The advantage real estate is that it can be safely leveraged (if you are smart about it) to provide a much better return than you could get a unleveraged investments, such as stocks (yes, I know you can trade on margin, too, but that is less safe unless you are really really smart). 

    If you want to be free and clear I'd probably stick with stocks.  You'd still get a small advantage investing in real estate, but you'd be much less liquid.

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