Like most of "louder with crowder" -- this is a very controversial topic.
I'm on team Grant Cardone ... investing in single family or small multifamily should be short-term, value-add flips that create wealth for investment in larger multifamily properties.
@Isaac Johnson 2-4 units is a great way to start. However, larger units offer many many more advantages like more cash flow, lower volatility of income, and non recourse loans.
@Spencer Cornelia I see what you mean, my market isn’t like that so I probably wouldn’t want roommates like that, but if someone does, and they can make it work, then great for them.
@Bill F. Again, I think that because there are so many different ways to invest in RE, and other people like different ways, REI is such a beautiful thing!
totally agree with #1 in Lower priced market. But in higher priced markets, good PMs are easier to find since they are also generating more gross revenue
#2) inability to efficiently scale?
Why? It’s perfectly possible if you are competent. I know multiple people with small MF portfolios ranging from 200-1000 total units. Mostly smaller buildings, 3-10 unit buildings. All self managed. It’s definitely doable. Just requires some infrastructure and systems put in place to run efficiently.
Nice thing with 3-4 units, you usually can get an Appraised value boost from Owner occupiers.
- tenants have close neighbors similar to an apartment but without amenities.
you're right that small multi should be bought by new investors......because experienced investors wouldn't bother.
Lol this is nonsense. There are plenty of experienced investors that have 100+ units of small MF.
Large MF is great when you are using OPM and your making your money on a promote, juicing your returns. If you are investing your own money, it’s easier to get higher returns in small MF since you don’t compete with syndications and larger funds.
OP, every part of the MF space has room to grow in. Just depends on your market and personal capabilities. It’s usually easier to buy small MF since large MF supply is more limited in certain markets.
Since I’m new, I have more questions than opinions but something to think about; is the MF located in a neighborhood of SFs? If so, does that hurt the appreciation if most people come to that neighborhood looking for SF homes?
I have the option of purchasing my second rental in Nashville that can easily be converted into multi family but it’s the exact scenario mentioned above. It would be one of the only multi family homes in the neighborhood.
My plan is to have 20 SF houses to be able to retire with in 9 years (at 48). I'm on #3 - I started last year. Why SF? 1) the clientele are more desirable to work with 2) i make $400 per door after piti payments 3) they will be easily salable if I change strategies 4) they are SUPER easy to manage (rarely get calls for fixes; etf payments; escrow) 5) they are so hands off (after initial repair) i can go on vacations and spend lots of time doing what *I* want when i retire.
And that is my goal: more time doing the things that I want to do. I dont need to be rich. I'll have a portfolio worth $2 million in 9 years (after free-and-clear of course). I'm happy with that. I understand the scalability part... but those i know who own 5-6 plexes spend a LOT more time with tenants and management.