As someone who has been flipping houses and holding single family home rentals for years now, I am often asked WHY change gears to investing in multifamily? So I decided to share what led me down this path!
Over time we have accumulated numerous single family properties that we hold as rental properties. We also flip several properties a year. In our local market, it is extremely difficult to find good property management at a decent price (and by decent – I mean a price that won’t kill your cash flow on the property). So needless to say, we ended up self-managing all of these properties on our own. You reach a point where you have so many properties to self manage that you have just landed yourself a new full time job. And no one seeks to grown wealth AND keep working a full time job.
We started to re-evaluate our business and the direction we were headed. We thought about our favorite property – A six unit apartment building – and why we love it so much. Here are the pros of that building:
We make money not only off of rent, but also off the washer and dryer (added value!)
The apartments are more affordable than a single family home and therefore in high demand
When one tenant moves out, the rent from the other 5 apartments still covers the mortgage payment
Discounts on repairs because we can upgrade and improve multiple apartments at one time
We are managing 6 tenants all in one location
With our single family homes, when the tenant moves out, we pay the mortgage out of pocket. There are also, typically, no value adds such as coin operated washer and dryers. On top of all this,the single family home rents are much more, making them more difficult to rent. AND.. we are managing multiple tenants spread out over the entire county!
It didn’t take much for us to decide that we needed to duplicate our 6 unit… but on a larger scale. Once we set out to do so, we got a taste of the icing on the cake. Not only were the larger multi family buildings better for us, but they were getting our investors better returns as well!! Our business has been built on partnerships with private money investors for years. After moving to large multi family investing, I don’t think we will ever be able to get them to go back to investing in single family homes! The ease of management and returns are just what we all were looking for!