All Forum Posts by: Chase Gochnauer

It has nothing to do with ego. It has everything to do with the numbers. Cost segregation is probably one of the best reasons to buy apartments (ever heard of a guy named Trump not paying taxes). If you want to build a business, you can hire maintenance and leasing agents.

If you have a duplex and one tenant leaves, your COC is basically gone for the year. The forced appreciation is also another huge component. We have refinanced over $7 million in the past 3 years, which is tax free. That is rather difficult to accomplish with SFH.

I was taught by mentors to copy those you want to strive to become. Most wealthy investors are not purchasing SFH, they are in the commercial space, for those reasons I have mentioned above. Prices have definitely escalated the past few years, but there are still deals out there if you network with brokers.

Hope that helps

Gino

Yes! Cost segregation is HUGE for tax savings and just got a huge boost with the new tax plan.

1 Vote

Originally posted by @Eric James:

Originally posted by @Chase Gochnauer:

Sorry I can't quote on the mobile app. Yes SFH can be scaled but it's a lot of work. BRRRing 30-40 SFH is going to be 10x the work of buying and operating a 71 unit in my experience. So it's just about whether all that extra work is worth the extra returns, which depends on the stage you're at in your investing career.

If you buy a value add MFH are you able to refinance quickly based on the new value? A concern I would have at this stage would be getting stuck with my capital in the property for an extended period of time (vs. BRRR).

I'll be honest I've never refi'd after a value add on a large MFH but I don't see it being a problem. You may have a problem if you're using one of the Freddie/Fannie programs, but if you're working with a local lender, then I don't see an issue as long as it appraises. You'd just have to have it long enough to show stable, increased rents. I have a 12 plex I'll be doing it on soon, and don't foresee an issue. The only challenge is that it takes longer than a SFH. I can buy/rehab/rent a SFH in just a couple/few months versus it may take a year for a larger property to get each unit upgraded and re-rented for a higher price.

My 71 unit I purchased though, while there is some value add, I don't see it being something I refinance right away unless I goto the Freddie Mac small business loan program.

0 Votes

Originally posted by @John Woodrich:

I haven't seen this mentioned but how good is the liquidity on a 100 unit complex? The liquidity on single family houses is pretty good right now!

For investors with a lot of money to invest and no need to divest, multifamily may be the way to go. For those of us who do not have "bigger pockets" renovating and renting single family houses may be a better way to increase equity and grow a business.

I would say pretty good. I can find SFH deals all day long but there's only a handful of complexes even for sale in my metro. Absolutely SFHs are the way to start when capital is a little tighter.

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2 Votes

No but you were comparing returns on buying an apartment to using the same money to buy a SFH. I don't know that it's fair to compare the return on buying a large apartment complex(usually turn key as it'll typically be 90-95% occupied even if there is an opportunity for a value add) to the return on buying a house that needs rehabbed and then rented. To me the fair comparison would be comparing returns on buying an apartment complex and a rent ready house. I don't know that you can find a rent ready house with significantly higher cap rate than a multifamily complex.

1 Vote

Also when the OP talks about anticipating a $100k SFH making more than a $100k MFH I do believe that has to do with PM fees as others have mentioned. You'll be hard pressed to find a turn key SFH that's going to realistically make you much over an 8 cap with a PM factored in.

1 Vote

I have 135 or so units. 71 in a recently acquired apartment complex, 12 plex, 8 Plex, and remainder are duplex or SFH. I have about 30-40 SFH in there I've BRRRd the last 2 years. The main advantage I see for the large multi family is scalability. Its much easier to grow quickly in larger multifamily. Someone mentioned above that buying and doing due diligence on a complex like this 71 unit would be equal to BRRRing 30 units in a year. Not at all, maybe equal to the time spent BRRRing 2 properties. I love the SFH, I think they're more stable and rent faster but it's much harder/time consuming to really grow your units with SFH. There are portfolios of SFH available but every one of those I looked at were not good deals. If you think it would be time consuming to do diligence on a 50 unit complex imagine trying to do it on 50 SFH, it's a nightmare! Not to mention you'll run into a lot of "lipstick on a pig" remodels that are overpriced in that bundle just because of its cap rate. I will always continue purchasing SFH just because I enjoy it. The thrill of getting a great deal and watching it be transformed from a dump to a nice home and renting it out is something that's hard to replace in multifamily.

3 Votes

I don't know your PM setup but usually PM rates will go down the more units you throw their way. So maybe giving them the additional 8 will lower your rates overall.

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I don't know that you can really have it both ways. If you aren't available 2-3 months a year then you need a property manager. I got a property manager at 6 units and never looked back.

1 Vote

My personal residence is 3.6% 7 year ARM. I'm currently getting 4.75% on my investment properties. 5 is way high. I'd refinance it. I am unsure how you got stuck with that high of a rate unless your credit is bad.

0 Votes

All Forum Posts by: Chase Gochnauer

Chase Gochnauer has started 33 posts and replied 367 times.

Post: Help me understand the advantage of multi's

Post: Help me understand the advantage of multi's

Post: Help me understand the advantage of multi's

Post: Help me understand the advantage of multi's

Post: Help me understand the advantage of multi's

Post: Help me understand the advantage of multi's

Post: Help me understand the advantage of multi's

Post: How do you self manage when traveling?

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Post: Private Money to pay off Mortgage. Should I?