Single- or Multi-Family in Cleveland?

Question

I'm looking to make my first investment purchase in the Cleveland, Ohio area and having difficulty deciding to focus on either a single- or multi-family property.

My original thought was to focus on single-family due to more familiarity and my understanding that it would most likely attract a longer-term tenant with hopefully less headache.  However, after analyzing multiple properties in the area, it seems that multi-family more easily meets or exceeds the 1% rule (of thumb) and would thus probably bring more cashflow.

I would much prefer to have a stable long-term tenant than to have yearly turn-over but am trying to get a better feel for the opportunity cost difference between the two types of housing.  Does the additional cashflow of multi-family outweigh the headache, etc?

Thank so much for any feedback and experience!

Dan Thompson · Answer

@Joseph Turner one nice thing about sfr is the utilities in Cleveland ...the tenants pay them but not on multi ...you are responsible.

Anthony Vander Meer · Answer

@Joseph Turner

I don’t know much about Cleveland but I’m a firm believer in starting off with multifamily. Considering your out of state you want to make it worth your while.  Cash flow is better, your more diversified with rents (ie 2-4 rent payments coming in better then 1) , and you’ll scale quicker. Good luck!  Either way find a deal, buy it, learn and do it again.

Remington Lyman · Answer

I think you should start with single-family and see how you like it. It is a lot easier to do with your first investment in a new market. I see a lot of out-of-state investors do that here in Ohio.

James Wise · Answer

While this is a reasonable stance to take, if you play the averages you will see a longer average tenancy with single family homes than multi family homes.

Brandon Goldsmith · Answer

Starting out with SFH is never a bad idea. You can get solid long-term tenants and if you go to sell you have more options when selling it to an investor or a family who will pay more, especially depending on the renovations you do before you sell it. @Joseph Turner

Account Closed · Answer

I wouldn’t assume that either single-family tenants always stay a long time or multi family tenants are always a headache. I would just buy the best deal that I could find.

Joseph Turner · Answer

Thank you all for the feedback!  Those are all very solid points to consider, especially when exploring a new market.  I do think single-family might be the safest way to get started.

Single- or Multi-Family in Cleveland?

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