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Updated over 4 years ago on . Most recent reply

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12
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8
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Brian Osso
  • Rental Property Investor
  • Prospect, CT
8
Votes |
12
Posts

Long term multi-family homes vs SFH?

Brian Osso
  • Rental Property Investor
  • Prospect, CT
Posted

Just curious of the long term investment of multi-family over SFH?

I'm new and originally was interested in BRRRRing SFH but the numbers in my market don't work. I've shifted to looking at multi-family properties but I have a question I'm hoping someone can answer...

What happens long term when you want to sell a multi-family? It seems so easy to invest in a SFH, cash flow, gain some equity, and eventually have the ability to sell depending on the market. In my head this doesn't seem the same for multi-families. Are there that many buyers for these turn-key properties?? I would think it's much easier to sell and make a nice profit on a SFH in a nice area in 10 years as opposed to a duplex in a less than ideal neighborhood.

Although I’m thinking way ahead... I fear having a portfolio of multi-families that are extremely difficult to sell if I was looking to cash out.

Any advice would be greatly appreciated!

Most Popular Reply

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313
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322
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Nick Robinson
  • Rental Property Investor
  • Murrieta, CA
322
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313
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Nick Robinson
  • Rental Property Investor
  • Murrieta, CA
Replied

@Brian Osso

Brain,

For my two cents I prefer commercial multifamily(5+ units). The reasons for multifamily:

1. Numbers work better (more cash flow)

2. More security (if you have a SFR and someone moves out you have a 100% vacancy. If you have a ten unit building and one person moves or you only have a 10%vacancy)

3. Loan is based on property not on the borrower

4. All your units are in one place which makes it easier to manage for yourself or property manager

5. The numbers are bigger (makes it more fun) also if you only make $100/mo one issue comes up and it eliminates your profit for the year or more.

6. Easier to move. People will always be in a market for a property that cash flows

7. Only have to do one transaction for an apartment but with a SFR you have to do a transaction for everyone (more fees and a headache)

8. Value is based on NOI. So as rents go up the value of the property goes up. Under four units is based on comparable s

9. Barrier to entry.

Only issue for the commercial loan you have to come up with 25%+ down. Usually they want more like 30%. So takes some capital.

Good luck in whatever you choose. As long as you pick the right property real estate is always a great investment.

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