4plex vs 14plex, why are LMF better?

[Raymond Rashid]

Hi Guys,

I've only ever bought duplexes, and I am now looking to scale my portfolio.

I am investigating two deals, a 4plex vs 14plex. Currently the 4plex looks much more attractive. However, I'm not sure why, but everyone is saying more doors the better. I understand it's less in gas, and overall utilities, maintenance, etc, but at the present the numbers for the 4plex, look much more attractive than the 14plex. If there is anything else I'm not noticing, or understanding about LMF(apartment) investing and how it differs from SMF please let me know. And how do you analyze larger building vs smaller. Numbers below.

4plex

Purchase Price $600,000

Current Rent $5,950.00

Total Expenses including Vacancy(5%) and MGMT(5%) $1784.72

NOI $4165.28

Cash on Cash 18.9%

14plex

Purchase Price $1,100,000

Total Rent $11,675

Total Expenses including Vacancy(5%) and MGMT(5%) $6,148.74

Cap Rate 6%

Cash on Cash 7.4%

**Maintenance fee last year was about 18k, not sure why it was so high. Also 75% of tenants rent are way below market value, many tenants have been there prior to year 2000.