There was a string earlier asking what you would do REI wise if you could do it over again. Someone responded that they would buy more SFH. My question is, for a new REI investor - what is better to get your feet wet - a SFH or a duplex/triplex/small apartment complex. From a risk adverse perspective - I like the idea of multiple units providing some safety from vacancy. However, after lurking in these forums for a while, it seems as if small apartment complexes have a much larger cost attached to it (someone in the commercial threats said 50% of stated income), as far as I know no one has stated SFHs have near that much yearly cost to them.
So, thoughts? SFH v. apartments/duplexes - What are the benefts (ease of maintenance, cost, appreciation, etc?)
In my opinion, SFHs are by FAR better for the beginning investor. The reason is that the tenants are generally better, which is a hugh part of the rental business. Also, it is far easier to get rid of a SFH if you decide that landlording is not for you.
The expenses for both apartments and SFHs run between 45% to 50% of gross rents.
I agree with propertymanager for all the same reasons.
Though my investment career is admittedly short (so far), I’m also inclined toward the SFH. I think you get a better caliber of tenant. They tend to be more stable.
Also, you’re probably going to be investing in something that’s at the “entry level” side of the market. That means when it’s time to sell, there’s more likely to be a buyer looking for their first residence or investment (as you are now).
And another point, financing is easier to line up for a SFH, as opposed to commercial loans for multi-unit properties.
There are certainly more exit strategies with a sfh. That makes it easier to unload at any time. In MN over the last couple years it was very very hard to sell a multi family. Prices when up, then vacancies went up. The buyers dissapeard. What you said about reduced risk by having multiple units… well, sort of, in theory. But what if all units go vacant? I had 2 4plexs in a single develpment. The develpment ended up having problems stemming from section 8, and I ended up with 8 vacancies within 2 months. With SFH you properties are more spread out, and thus have less risk. But on the other hand there is more locations you need to be in, so it can be more work. They all have their advantages, and disadvantages.
however financing is pretty much the same up to 4 units.
one thing is finding a SFH that has the right numbers is a lot tougher becuase you are in competition with owner occupied buyers as well as potential rehabbers looking to flip to O/O.
I think the biggest thing is it is easy to exit and gives you “try it and see if you like it” approach. LLing is not for everyone and too many people think its free/easy money which it is not
My first is going to be a multi. I am renting now so I would be getting my first home and first investment property in one purchase. I’d rather pay myself rent.
My first is going to be a multi. I am renting now so I would be getting my first home and first investment property in one purchase. I'd rather pay myself rent.