Assuming same cost per door, same rent: SFHs or small MFs?

[Paul B.]

Let's say you have a choice between two $35,000 SFHs in a primarily OO neighborhood or one $70,000 duplex in a primarily rental neighborhood -- assume further they're 100% comparable in terms of location, quality of tenants, etc.

For some reason, I've always liked the idea of small MFs. I like that you can take care of two, three, or four doors in one visit. I also like that you need to get only one loan to finance all those doors.

However, I'm thinking I may need to shift my thinking, because I think there's probably more upside on the asset value with a collection of SFHs. There's certainly a bigger buyer universe, should I ever want to sell.

I am seeing a lot of nice little houses in stable neighborhoods going for $35K that should rent for $650 to $675 a month -- and I'm intrigued.

What say you, BP Community?

[Angela Gennari]

As an investor and a Realtor, I say go with SFH all day long. Like you, I tend to favor the MF for the same reasons, but in looking at the market, I find that when it comes time to sell, a SFH will be much more solvent. Only other investors are likely to be interested in the MF, and there are not as many of us as there used to be making the pool of buyers fairly limited, whereas, you could sell a SFH to anyone. Also, the neighborhoods are key, an OO neighborhood will hold its value, and continued improvements will increase the value, unlike a majority rental community where capital improvements are rare and people are less likely to put down roots and make investments in their community. Thanks for asking the question, I have been pondering the same thing lately, and in responding to you, it has forced me to really think through the dilemma. Just my two cents. :roll: