Originally posted by @Jeff B.:
I'm vested in MFU's and I'll give you my take.
- SFR & MFU appreciate differently
- expenses are comparable but the MFU has more doors hence more GSI & NOI
On (1), the SFR 'competes' via comps with others in the community of like configurations (2/1, 3/1, 3/2) and is dependent upon the community economy. The MFU is not evaluated with comps, but by the NOI it produces. Take an example of 10 units @ $1000 or a GSI of 10,000 * 12 months = 120k. Next year, raise the rents by $100. That's a GSI of 11,000 * 12 = 132k. Regardless of what the expenses are, that's a BIG change in value for zero effort. (it's called Forced Appreciation and only applicable to the MFU).
The hard part is getting the 75% LTV loan. I used an SFR to 1031 into my MFU, so that's a path *IF* you can buy in a rapidly appreciating SFR market. You need to hold it for at least two years as a rental to qualify for the 1031.
That is exactly what I'm trying to do: Buy a cheap MF property that needs rehab, and raise the NOI, then cash out refi. Put that money down on the next one, and so on.
Some folks have told me that some lenders don't care what you're collecting in rent on MF, they will just continue to looks at MF comps, and you can't cash out anymore than what other similar properties are selling for (which would suck).
Another reason I would prefer MF over SF is all the doors are in one location.
I appreciate all the input so far. Thank you.
