New investors...Should you start out small vs larger when investing in Multi-Family?

[Darnell Lockett]

I've seen this question often here on BP. When you're first starting out as an investor and you want it to be in MF properties, is it better to start with a 2-4 unit or go with something larger such as a 10-12 unit? Imo...a lack of experience is going to come into play. If you're new to investing and want to start in MF, a 2-4 unit is where you're likely to find more success with financing. I can't speak for other lenders, but I don't know any willing to lend on a 10-12 unit property for a new or inexperienced investor (we're not...unless you have a strong sponsor on the deal with you).  Get your first 2-4 unit in your portfolio and manage it efficiently. Add another four unit property and do the same. Now you have a more favorable chance of getting financing for that 5-12 unit property. 

[Matthew Masoud]

My advice is always to do a 2-4 units first, even if you have the money and capital to go big. Closing your first deal teaches you so much. How to deal with tenants, contractors, and vendors. 

After that move on to 5+ so you're in the commercial space. Operations are very similar but valuation is very different. 

I spent way too much time doing 2-4 unit deals when I should have been in commercial mf 5+.