Go big or go home? Multiple SF/MultiF vs Apartment building

[William Crutcher]

Hey there, I’m a new investor currently collecting info on various properties in the local area and wanted to get y’alls thoughts... If one is just starting out investing with the following goals: -$5k/month cash flow within 5 years -multi-fams / single family / apartment buildings I have a combination of accumulated personal savings and over $200k available in the form of a HELOC (debt free home) What are your thoughts on buying a few multi-fams/single fams vs buying the biggest apartment building I could afford? Thanks in advance!

[Anthony Gayden]

@William Crutcher

I only have experience with small multifamily (4 units) and single family so I may be a little biased. I like small multifamily because it gives you the best of both worlds when you are getting started.

Let me give you an example. You buy a 16 unit apartment complex. You use commercial financing, you have a higher interest rate, 20 year amortization, and a 5 year balloon.

On the other hand if you buy 4-4plex buildings (perhaps all located right next to each other) you can use residential financing, a little bit lower interest rate, 30 year amortization, and no balloon. The downside of course being closing costs on 4 separate loans.