I'm newer to RE investing and I'm looking to get the forums opinion on Apartment buildings vs Small Multi-Family.
I would say I have a larger amount of capital to start with than most beginners so I'm debating whether or not I should skip doing SFHs and SMF and go straight to Apartment buildings with 10+ units.
The reason I'm leaning towards apartments is because if I wanted to deploy all of the capital I would need to acquire nearly 10 properties and I'm questioning if it would just be more efficient to source one really solid apartment deal instead of several MFHs.
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
3y
Hi Joshua, I'm a big fan of multifamily investing. An important question is whether you will be self-managing or not. If so, I recommend starting small. You said you have more money than typical, so you shouldn't be needing to house-hack a small multi, so really no reason to not go bigger unless self-manage. Larger multifamily means more work and you can get bogged down in the daily management needs. Smaller is more forgiving if you make a mistake. You said you are newer so maybe have some experience? Then go big.
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
3y
Hi Joshua, I'm a big fan of multifamily investing. An important question is whether you will be self-managing or not. If so, I recommend starting small. You said you have more money than typical, so you shouldn't be needing to house-hack a small multi, so really no reason to not go bigger unless self-manage. Larger multifamily means more work and you can get bogged down in the daily management needs. Smaller is more forgiving if you make a mistake. You said you are newer so maybe have some experience? Then go big.
Real Estate Broker · Columbus, OH · Member since 2021 · 203 posts · 247 votes
3y
MFH if you can swing it financially. There is more toppling cashflow without a doubt. If you get 10 individual properties you will have 10 roofs, HVAC's, Water tanks, property taxes, insurance files- where if you get a good big boy you limit many of those.
The market is getting swifty(at least in my city). Great time to try and take down a MFH. Goodluck with your hunt @Joshua Mark-Warren Landers
MFH if you can swing it financially. There is more toppling cashflow without a doubt. If you get 10 individual properties you will have 10 roofs, HVAC's, Water tanks, property taxes, insurance files- where if you get a good big boy you limit many of those.
The market is getting swifty(at least in my city). Great time to try and take down a MFH. Goodluck with your hunt @Joshua Mark-Warren Landers
Yeah this is exactly what I was thinking as well. Do more research upfront and go big on the right property.
1 Roof / 1 Headache
10 Roofs /10 Headaches.
What do you think about me doing all of the management by myself to start? Or would is be better to get a property manager and work with them as the asset manager?
Investor · Tucson, AZ · Member since 2017 · 394 posts · 178 votes
3y
@Joshua Mark-Warren Landers Congrats. That is a nice position to be in and very exciting as well. I would recommend getting your feet wet and start small if you can. The other option is to find someone that is already doing larger multi successfully and team up with them. Syndicators and multifamily investors are always looking for capital and someone to help with all the tasks of asset management. Larger multi is absolutely a team sport and those that go it alone do it at their own peril!
Investor · Whippany, NJ · Member since 2010 · 356 posts · 104 votes
3y
Find someone who is doing what you want to do and partner up with them on a multifamily. After that you can see if that is where you want to go. I did the typical path of Fix & Flips to Small Multifamily to Apartments. If I knew in the beginning what I know now; I would have jumped right to apartments. Happy to discuss !
Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
3y
@Joshua Mark-Warren Landers I would say MF, for all the reasons listed here. Rather than diving in on your own, though, start networking with individuals with more experience and do a Joint Venture. This will enable you to find a better quality asset, get you over the non-recourse debt threshold (not personally on the hook for the loan), and receive better loan terms. Make sure you add value, the skillsets fit, and everyone is equally committed.
@Joshua Mark-Warren Landers are you going to be purchasing local to where you are or in another area? Self-management becomes more difficult the farther away you are. Also, if you are investing out of state, a property manager will most likely have a better pulse on the housing and rental market than you will through research.
A fantastic way to learn is by partnering with someone who has done something similar in the past. This can reduce your risk but also reduce your potential income from a deal.
It all really comes down to the numbers of what you find. Keep in mind that your cap rate should be higher than any financing you acquire in order for a deal to be profitable.