Should I wait for a multi or just get started with an SFR?

Question

Hey all,

I would like to stick with MFH for all the reasons that go along with it. I am struggling to find multi's near me though, and that I can afford. Would it be better in your opinion to just get started with a decent SFR or wait for a MFH if that's the long term path I want to take?

Thanks!

Peter Amour · Answer

i started with a few single family homes , but they were large college rentals so not really the same . having said that , i think if it gets you started and the numbers work , its a stepping stone to the next purchase ( single or multi ) .

my first few were netting $1,000 a month after , p&i , taxes, insurance.... so i ended up buying 3-4 over 2 years , then sold them after i got sick of babysitting students , and did some 1031 exchanges .

David Faulkner · Answer

I'm in the minority here on BP, but I actually prefer SFRs over MF as they have many advantages. The best ones being that in most markets they are the most in demand product for both rentals and sales, tenant quality is higher, there is more inventory of distressed property so it is easier to find one at a larger discount, and if/when I do sell it is at top dollar to a retail buyer (not an investor).

Daniel J. · Answer

Thanks for all the different opinions!

Ben Elliott · Answer

I have not started my real estate journey yet but am planning to begin 11/2017 (Almost there!).  I am also running into a shortage of MFR relative to other cities. However, this is forcing me to think creatively. Here are a few ideas that I got from networking, listening to podcasts and other forms of RE Education.

1. Are there multi-family rentals that are not visible on the market?  I was able to drive around and  found a few concentrated areas of MFR near a college section. I plan on talking to some of the land lords and gauging if they are looking to off load their MFRs in the future.

2. Are there ways to be creative in zoning? I have recently enjoyed learning more about zoning. Looking at the different parcels, I have found some homes advertised as multi-family that are zoned as single families. conversely, I have also heard of opportunities where some Single family zoned houses have special zoning that allow an additional dwelling. From what I understand, this would allow someone to turn a garage, basement, etc into a livable space. This has me asking the question, "What would be the additional cost to add another door and does those numbers make sense with the SFR house price?" . In addition to the zoning that is in place, I have heard there is a process to change zoning. Don't know all the details, but excited to figure out that piece of the puzzle. This could allow additional opportunities for MFR in an initial SFR purchase.

3. Instead of thinking per door, possibly looking at splitting a house per room. This seems to make more sense in a college type setting but another opportunity to increase cash flow from a SFR situation.

Keep sharing your progress. I am personally interested to see how your journey turns out.

Oleg Shalumov · Answer

I wish one could buy a MF as easy as a car. Unfortunately they are not as widely available. :-)

Thomas S. · Answer

If you were looking to buy a car would you settle for a bicycle.

They are not the same product and not what you are looking for to do the job so why settle for something that is not what you want.

If you drop down to SFHs why not do it as a flip as opposed to a hold. Way less work and real payoff as opposed to managing SFHs.

Chase Keller · Answer

How long until you're able to afford getting the next MF?  If it's going to be a couple/few years, you can find a SFR that is a short term play, help build up the capital faster.  If you buy a long-term SFR now, it could take you that much longer to be able to buy the MF.  Or even put the money into a shorter term syndication, puts your money to work while you wait for that next MF

Luis Tafolla · Answer

@Daniel Jarvis

as long as the deal is right you should buy the SFR. plus its nice to have a diverse portfolio.

Steve Milford · Answer

@Daniel Jarvis

Do what fits in line with your goals and what you are passionate about. This will keep you motivated when times get tough, and the properties are thin.

Steve

Should I wait for a multi or just get started with an SFR?

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