Multifamily vs. Couple of single homes

[Gladys Cepeda]

Hey investors!! What's your take/advice? Need advice as I am embarking in purchasing my first rental property. 

Is it better to invest in one 3-4 unit multi family first or 2-3 cheaper single family homes? 

what would u say is a good percentage cash flow amount??

[Mathew Pezon]

Quote from @Gladys Cepeda:

Hey investors!! What's your take/advice? Need advice as I am embarking in purchasing my first rental property. 

Is it better to invest in one 3-4 unit multi family first or 2-3 cheaper single family homes? 

what would u say is a good percentage cash flow amount??

Hey Gladys,

Jumping into real estate investing is an exciting step, and it's awesome you're weighing your options carefully. Between multifamily units and single-family homes, the best choice really hinges on aligning with your financial goals and investment strategy.

Multifamily properties can be a great kickstart, offering the convenience of managing all your units in one location. This could mean a steadier income flow, especially since vacancies in one unit don't leave you without any income. Yet, the initial investment might be heftier, and the management could be more complex given you're dealing with more tenants under one roof.

On the other hand, single-family homes might spread out your risk and potentially cater to longer-term tenants, promising less frequent turnovers. Managing multiple properties does come with its own set of challenges, like juggling different maintenance issues, taxes, and possibly even varying market conditions if they're not all in the same area.

Here's where your financial goals come into play: Are you looking for a more hands-on investment with potentially higher cash flow from the get-go? A multifamily unit in Providence might be your answer. Or, do you prefer a more diversified approach, possibly aiming for long-term appreciation and stability? Then, several single-family homes could fit the bill.

Aiming for a cash-on-cash return of about 8% or higher is a solid baseline, but remember, this can fluctuate based on many factors including your specific market. Ultimately, the decision should mirror your financial ambitions, how actively you're looking to manage your portfolio, and your risk tolerance level.

Take some time to reflect on what you hope to achieve with this investment. Whether it's building wealth over time, generating immediate cash flow, or a mix of both, let your financial goals guide your choice.

All the best in making a decision that aligns with your vision for the future!