Moving From Many Single Houses To Multi Unit Buildings

Hello All,



I currently own 5 single family rentals (200k each) and my plan has always been to cash in the smaller houses and move up to larger multi units.



I have enough equity in them to start doing this, but now that I am looking at the numbers, it doesn’t make sense.



If each of my current rentals gives me $500/mth – total - $2500/mth



Every single multi apartment I have looked at around from 500K – 1.3 Mil doesn’t even come close to hitting the same amount of cash flow for the amount it cost, that the single families do.



Just for example:



1 mil of single family’s brings in 2500/mth cash flow

A 1 mil apartment seems to only bring a max of 1500/mth flow



It seems like where prices are right now, it makes sense for me to keep buying single families even though my plan WAS to buy up into multi housing.



Is anyone else finding the same thing?



Any thoughts would be appreciated.

Comments(12)

  • cjmazur15th February, 2008

    you may want to shop cheaper market.

    Are you comparing the same markets for the SFR and MF?

  • darrylgood21st February, 2008

    Definitely some good points. Thanks for the info.

  • JaneSherman22nd February, 2008

    For borrowers needing more residential loans, why not put them in a S corp and refi commercial blanket loan. I have done that to help one of my clients. *** Do not advertise or post contact information!***[ Edited by ypochris on Date 02/22/2008 ]

  • ypochris22nd February, 2008

    "but the numbers you give would have a 3% cap rate with no expenses!"

    He says cash flow, not gross income.

    Chris

  • boardwalk12016th March, 2008

    tcinvestor5 Hit it on the head!
    And...
    I would look in new areas that have better cap rate or ROI or what ever you use to evaluate properties and move out of your back yard as I am doing. There are some fantastic areas of this country that are in what I call "the land that time forgot". The price of purchasing has not changed but the rents have creaped up for a long hold return. Search them out in your area.

    Mike

  • darrylgood7th March, 2008

    Thanks Mike

  • AHall_N_TX28th August, 2008

    Has anyone cracked the 10 mortgage limit nut yet. I have struggled with this for almost a year now. I have been trying to find a lender that would provide loans on single family homes. I have excellent credit and excellent cash flow, income, rental history, etc.

  • cjmazur29th August, 2008

    have you factor realistic vacancy factors?

    My condo being empty is 100% negative.

  • AHall_N_TX31st August, 2008

    I will try to contact more local banks here in the Dallas area to obtain financing. Are you have to put any money down? On all of the properties I have accumulated thus far I have been able to purchase them for cash at 80% of the value and then refinance to get all of my cash back out.

  • LynLinz1st December, 2008

    He said "each of my current rentals gives me $500/mth – total - $2500/mth"

    He has 5 rentals

  • jstrishak00710th April, 2009

    An additional consideration is equity appreciation. Due to the fact that prices are generally much higher for multifamily, the potential to make/lose much more money through appreciation/depreciation should be considered.

    Best,
    jon.

  • rglover54815th April, 2009

    Deal sounds real good, until you said this:

    "Cap rate at $800k, my planned offer would be just over 10, per unit price of $37,000"

    Do you realize that you are about to offer a guy with a profitable, excellent maintenance and management set up....only 25k cash? and he still has to carry the loan.

    Think about it before you submit this offer, i dont see your advantage here and u may insult the guy.

    But thats just my 2c, it may be worth what u paid me for it.

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