What are economies of scale benefits?

[Eric James]

What are the 'economy of scale' benefits of properties with multiple units? If one self manages I can see time savings due to not having to travel to multiple locations. But on the other hand, as there are fewer multifamily properties the location is likely to be farther away than smaller properties you could buy, so that might be a wash.

I can see the cost of roof replacement being lower, but mainly if this is compared to a single story property. How much would the savings be to replace a single roof over 5,000 square feet compared to 5 roofs over 1,000 square feet?

For items such as HVAC, hot water heaters, appliances etc., if all units have each of these, would the economy of scale factor mean you purchase (for example) 10 of everything at once, whether you need them all or not?

What other economy of scale savings could there be?

[Eric James]

@Jeff B. I can see a single sewer/water line being cheaper. A larger complex probably has less yard per unit than a smaller complex, so cost savings. On the other end of the spectrum, yard care is oftentimes the tenant's responsibility with SFH. Is the property tax 'rate' lower for multifamily properties? I think one would need to compare property taxes on a per cashflow basis, or something like that, to make a true comparison. Yeah, warehousing doesn't seem practical.

@Kim Meredith Hampton To make an accurate comparison I think would be to compare with some type of common denominator. For example, comparing a multifamily vs. multiple duplexes vs. multiple SFH. The alternative to a multifamily property isn't a single SFH.

Thanks @Oren K. $500 per unit for heating sounds like a really big savings over the cost for a SFH or even 2-4 unit properties. $1,500 per unit for roofing is probably a pretty good savings, but again, I think an accurate comparison would be in terms of a common denominator of returns. What is your cash flow or ROI on each of those units?