Better to get one expensive property or a few cheaper ones?

[Colette B.]

Hi all! I have a set amount to spend on investment property(ies) and am weighing the pros and cons of getting one that's larger and thus, more expensive vs. a few small ones in the same area. Any advice? I figure the larger would attract a family, while the smaller studio/1 BR types would be for couples/singles. As a newbie, I'd guess the smaller spaces would be easier to rent, but having one more expensive place might be easier in terms of management. Any thoughts? Thanks!

[James Wise]

Originally posted by @Colette B.:

Hi all! I have a set amount to spend on investment property(ies) and am weighing the pros and cons of getting one that's larger and thus, more expensive vs. a few small ones in the same area. Any advice? I figure the larger would attract a family, while the smaller studio/1 BR types would be for couples/singles. As a newbie, I'd guess the smaller spaces would be easier to rent, but having one more expensive place might be easier in terms of management. Any thoughts? Thanks!

 I look at it like this. You can get 10 residential mortgages. So assuming you have 1 mortgage for the house you live in you should use the remaining 9 on the most expensive 1-4 unit houses you can afford. You are essentially at least going to quadruple your money over the course of the loans so you should put as much out there as possible. That's literally the best debt in the world.

After you exhaust those 10 mortgages it's then time to look at the big stuff. Commercial financing has no limits. If the property has a good DSCR & you have the down payment money they will loan you as much as you can handle. Note, the terms are no where near as favorable as those 1st 10 residential loans.