Thinking about selling SFHs + primary, renting primary, buying MF

[Jessica G.]

Hey BP! So we are thinking about selling our two SFH rentals which have appreciated decently and also have very mediocre cash flow, as well as our primary which we bought really as a "live in flip". Selling all 3 would likely get us $180k - $200k in cash. Then we would rent our primary (can anyone say NO MORE fixing AC units, roofs, plumbing, etc etc etc)?? Hallelujah. The thought process behind this is that we ultimately want to be in multi family anyway, and I don't want to get stuck with mediocre SFH rentals if there is a downturn (I know I know, no one knows what is going to happen). We would buy another primary when we found a steal.

So... what would you do in our situation? I think part of me is hesitant because I hustled my *** off to get all 3 of these houses and selling would kind of make me feel like we are going backwards! But the ego needs to get checked in order to make the smartest move. Thoughts?

I appreciate any advice!

[JD Martin]

Well, there are advantages and disadvantages both ways. Keep in mind that if your biggest worry is a downturn, multi-family is no more immune than single-family; depending on the market it can have more exposure, because more SFHs may come on the market driving down apartment demand. Beyond that, you have a greater number of exit strategy players with SFHs, whereas MFH exit strategy is going to be limited to investors - most of whom are looking for a deal. 

So I think your question isn't really "SFH vs MFH", which is a legitimate question, it is "Are the particular SFHs I own ideal as investments?" If they are not, there's no harm in selling and getting something different - but that something different doesn't have to be MFH.