Beginner's Route: SF as stepping stone or direct to MF?

[Sarah Barra]

Hello everyone! I'm curious about whether my plan for acquisition this coming year is half-baked...I'm a single mom of 3, renter, who's been drawing only about 40K annually from her business so that i could systematize it with employees and scale it (which is working well), so I can draw more out of it this coming year, but my credit is maxed out and I have no cash. I don't want to go the duplex model of entry for multiple reasons. So in evaluating whether to try to buy a SF with tenant in place or go for multifamily....my analysis says that  I should skip buying a small SF  as a stepping stone, and hold out for a small multifamily (over 4) bc hard money lenders will focus more on the deal than my own credit...anybody gone this route? Browsing LoopNet I've found a few MFs in ugly markets, 2 hours drive-time from where I live, needing rehab, numbers highly suspect bc they are so rounded a 3rd grader could do the math, you get the picture...If anyone has come from a similar financial background and can advise on how they got a foothold I would greatly appreciate it... my fear of doing a SF first is getting stuck small...I'm in Wilmington North Carolina, great growing market.

[Nathan Miller]

If you are starting out, I would recommend keeping it local.  If all the MF are in bad markets, that makes SF look a lot more attractive.

In the long-run, MF will likely cash flow sooner, but you have harder tenants to deal with.   SF cash flows later, with better tenants.  A lot of it is just landlord style.