Landlord Question and Answer Forum

I own a few different single family dwellings, that I lease out with moderate success, and I've been thinking of venturing into multi-uni rental housing. Anyone have any thoughts, reflections, warnings, etc on the matter?

Here are a few pros and cons, for multi-family apartment buildings: Pros: 1. Better cash flow 2. More convenient management 3. Less purchase competition, since only investors buy them Cons: 1. They cost more, which means more up-front investment 2. Have to mediate between your tenants, since they're neighbors 3. They can be harder to finance, and sometimes require more money down at settlement. 4. Have to sell to investors, which means you can't sell "retail" to a homeowner, and it's harder to sell. 5. Value tied to market rents, and is less about local sales prices. The bottom line is you have to determine your investing goals. If you're just looking for the best possible monthly cash flow, then go with multi-unit buildings. If you're hoping to buy low and eventually sell for a big profit to a homeowner, then SFDs are better. Good luck!

Posted by Gregory T, CA on Monday, September 13, 2010

I own a SFH and a duplex and in my experience in general tenants & prospective tenants in my SFH tend to by higher quality but this may be most likely because my SFH is in more of a family suburban community and my duplex is near downtown. The issue with mediating between tenants is a big difference - with multi units you have more conflicts that you have to deal with like complaints of noise, smoking in/around the units, general personality clashes. I think it is worth a shot though to buy a multi-unit--the potential cash flow is greater but again if you have one bad tenant that causes issues with the other tenant your potential cash flow could be worse.

Posted by Ranny M, MN on Thursday, September 16, 2010

I agree with the previous posts... and another option is Condo's or properties with an HOA. Generally there is little to no maintenance cost and renters need to comply with the rules and regulations of an HOA... and most have one in there about "getting along with neighbors". Our Condo's do well as rental income. The pros side is they're less expensive and cost less to own. The Con's are if looking at short term to sell they don't increase in value like SFH.

Posted by Management S, on Thursday, December 2, 2010