Should I jump right into Multi-Family???

[Jordan Decuir]

I am a new investor in TX. Does anybody have any input around whether it is feasible (or advisable) to start out with Multi-Family, as opposed to Single-Family? I like the multi-family model more and in the long run would like to be more heavily-weighted toward multi. What would be the major differences in terms of startup needs between multi and single family? Any and all input is much appreciated.

[Don Glasgow]

Hi Jeff, 

Just an FYI: some things I've learned about rental properties while running my property management company (small-140 doors). 

Make sure you have strong positive cash flow or a good amount of income because you will have other expenses than minor repairs and cleaning. 

This is what we have found:

Check the age of the hot water heaters (if they don't have an age write down the serial number and look up the model online for year built). Water heaters here usually last 15 years +-3 years. Replacing 4 hot water heaters if you have a plumber do it: $2800.

How old is the carpeting in each unit? 7 to 10 years use and then replace are good numbers for us. We figure $1.75 x the entire SF of the unit = replacement cost ($1500 to $2200)

How about the heating and air conditioning - here we us heat pumps mostly to heat and cool. They last about 17 years, and then the owner is spending $4000 to replace.

How old is the roof? Even tile roofs need the under layment replaced at about 25 years. Roof replacement is usually way more expensive than you think it will be. $5000 to $10,000? Not sure of numbers on this.

How does the exterior look? Exterior painting if hired out might run $5000 plus for a 4-plex. 

How is the parking lot? Paving is expensive. 

Is there any fencing? metal or plastic wonderful. Wood - bummer. If a wood fence makes it to 10 years here that's pretty good (rot and termites love wooden fences). 

How old are the fridges? Renters are hard on fridges. We buy used ones to replace broken ones. 

Dishwashers here only last 5 years due to our amazingly hard water.

As an example we own a mobile home used as a rental. We set aside $250/month for big expensive repairs. Probably a little more than we need but better safe than sorry.

Anyway, just our numbers for our area and the quality of the properties we manage (good quality).

Don