Tips for Newbies - Multi-Family Properties

[Bryan L.]

I see so many newbies come on here to BP and say that they want to invest in multies because they are "safer" or "lower risk". I suppose that the general thought process goes something like this: "well, when I have a vacancy, I will still have the other units paying to cover my mortgage". WRONG! What happens when you have multiple vacancies at the same time? Oh, so you don't think that it can or will happen? Ten percent vacancy doesn't necessarily mean that you will always have exactly 10% vacant. It means that you will have an average of 10% vacant. So, if you own a quad for example, there could very well be some months when you have 3 (or maybe even all 4) vacant at the same time and you could still have that 10% average. Then, what happens when you have 2 or 3 vacant AND they leave you with big repair bills and unpaid rent and you have to leave the utilities on while you are getting the units back to rent-ready because it's 10 degrees outside and you don't want the pipes to freeze? Actually, I just recently read a post here on BP where a person had a tri-plex and every one of the units had an eviction at the same time, along with the associated repairs. So do NOT fall into this trap that multis are some how naturally lower-risk investments. Ask me how I know.

[Timothy Trewin]

@Bryan L.

Thanks for that advice. I was looking into getting in multi family properties when I got to Tennessee but this makes me take a step back. Not saying I still wont do it, but now I take more time to plan for it instead of wrongly assuming they are safer investments. I do appreciate it.