4plex vs 10 plex

[Chris A.]

Hello,

I am pretty comfortable evaluating deals up to 4 units and have a have some experience with how the expenses run for these.

A great 10 plex just came up for sale by the bank, and I am curious how my analysis might need to change to take advantage of a larger property like this. What kind of extra expenses does everyone take into account for the additional units, are there any economies of scale, how do your factors change?

Im pretty excited about taking the plunge on this one, and would love some insight about how to make it to this next level of larger complexes!

[Chris Simmons]

It should not be too different than a 4 plex with a few basic assumptions like similar age etc.

Are the units individually metered or is it all bills paid?  I big building or 2 or more buildings totaling 10 rentable units?  Is there a laundry facility or hook ups in the units.  If there is a facility, you will have a higher electric or heating bill....both to heat and cool the facility and to operate the units.  This is in addition to whatever you will have to pay to light the grounds, parking lot, water bill etc.  How will it compare with revenue from the machines?....depends what you charge.

What is required in terms of snow, ice removal etc.  I see Tuscon but am clueless about whether you get any cold weather or not.  In my parts, the landlord tenant act treats 1-4 unit properties one way....very landlord friendly....and treats 5 unit or more in a much more commercial, landlord is liable for more sort of way.

Financing will have to be commercial.  I am not aware of a 30 year fixed rate type product you can get on this type property unlike what you can do with a quadplex.  Same with insurance.

but outside major things like this...it really is not much different.  It just tends to be more, smaller units that will have more turnover but still great cash flow if managed properly.