Apartment Investing: 100 duck-sized horses or 1 horse-sized duck

[Zack Bloom]

Trying to create a metaphor here based on the popular Reddit Question: "Would you rather fight 100 duck-sized horses or 1 horse sized duck" and draw parallels to apartment vs. single family home investing. You can go with 1 upper-mid market single family home and make decent margins if you know what to look for or you can go after a 20-unit apartment and make small margins on each unit but do well if you get it a full capacity. So that's my question, would you rather go after a cheaper 20-unit that takes more selling, more maintenance, and more marketing but is an overall safer bet, or fix and rent a nice single family home but risk overpaying or having your only unit vacant too long. Let's assume hypothetically your seed capital is the same for both. 

[Rodney Miller]

I currently own about 100 rental houses. I am also researching and looking into purchasing my first Multi-Family property. What I can tell you is that you're most likely gonna buy the SFH's below market value. I purchased 3 last week all around 60 cents on the dollar ( all in with repairs). Every time I buy a SFH I try to have 20-30k in equity at the get go.

Another point is that when you are buying houses at 60 cents on the dollar you can usually find a local bank to finance 90-100% of the deal because the loan to value is low ( very little money out of pocket)

You won't find many Multi-Family selling at that kind of discount due to the fact that you are dealing with a more sophisticated seller. That being said, It took me 7 years to accumulate my SFH portfolio and costs thousands of dollars in advertising ( bandit signs, postcards, internet, etc..) It also took a ton of feet on the ground taking phone calls, weeding out the bad deals, Meeting with 5 sellers in person only to get one good deal. Very hard to scale SFH model.

I've always steered away from Multi-Family because honestly it kind of intimidated me and I knew that I was competing with well funded institutional buyers and I would be able to buy at the discount that I am accustom to with SFH's. It would also require me to come up with a sizeable down payment which was a new concept to me.

After taking the time to research Multi-Family properties it makes much more sense to me.  What I thought were barriers to entry are easily overcome with the right strategy.  And even though you are gonna pay market value or close to market value you can increase that value substantially on the right deals.  In summation if I could go back 7 years I would definitely go Multi-Family.