What are your thoughts on buying Smaller multis 4-40?

[Eric Berkner]

What are your thoughts on management for smaller multis that won't necessarily have an on site manager? It seems everyone is going over or under this size of multi families. Does anyone own many of this size and manage them with an off site prop. manager?

[Todd Dexheimer]

Those are typically higher cash flow, higher cap rate properties because they are higher risk, higher management properties. The great thing about a larger property is that you can hire full time staff for maintenance and leasing and run it much more like a business. The other great thing is that capital improvements, especially to common space is spread out between all the units. Same goes with operating expenses. 

Think of it this way. If I want to spend $1mm making great resident amenities on a 500 unit, that is only $2,000/unit, but to get those same amenities on a 50 unit, you would spend $20,000/unit

I think the 10-75 unit properties make sense, especially if you can clump them together to create greater effiencies