$50k vs $100k SFR

[Eric P.]

All else being equal, would you rather own two SFRs that EACH cost $50k and EACH generate $200/mon in cashflow (so $400/mon total), or one $100k SFR that generates $400/mon in cashflow? So, bottom line, would you rather have your $400/mon cashflow spread across 1 or 2 SFRs? Here's what I can think of offhand:

Benefits of two SFRs that each cost $50k and each generate $200/mon in cashflow (so $400/mon total):

• More diversified portfolio: If 1 unit is vacant, still (probably) have cashflow on the other property
• Owning more units potentially means more future cashflow increases by raising rents

Benefits of $100k SFR that generates $400/mon in cashflow:

• Only have to close on 1 property, 1 set of closing costs, etc
• Takes fewer purchases to achieve your cashflow goals
• Better to only have to absorb CapEx expenses on 1 property not 2
• Nicer places typically attract a better quality tenant base
• Banks have restrictions on the # of mortgages you can hold; better to get more cashflow per mortgage

[Christopher Goldie]

In my opinion, 1 $100k property should equate to a higher quality tenant over a $50k property. 2 properties equal double the potential expenses, double the potential risks and in the case you presented, no more reward. As you listed the benefits to 1 property are higher than 2.