Single family homes versus multifamily, the age old question, which is better?
Really, it depends on who you are and where you are, so I really don’t have a thought either way. I think they’re both opportunities. I feel like you can find opportunities in both areas. However, if, at the end of the day, I had a choice, it would obviously be multifamily. I’d like to skip the five green houses and go directly to the red hotel, especially in today’s market.
And ideally, why do you want to level up and get to the apartment buildings or multifamily? It’s because you can hide a lot of mistakes by owning more. And what I mean by that is it’s called the economies of scale. So, to define what that means is if you had a duplex and I had a single-family rental, you had one vacancy and I had one vacancy, you would be 50% vacant, I’d be 100% vacant.
What investment is going to get you to 10 million dollars quicker? It’s obviously going to be multifamily.
So, by you owning one more unit, you reduce your risk by 50%. The more units you have, ie, the more critical mass you have, the better opportunity you have to be able to offset mistakes as well as risk. And that, for me, has been the key for multifamily. It allows you to grow your wealth a lot faster. That’s just one area. And I can’t forget to mention, the tax deferrals and the cash flows. It’s the ability to put your investment into hyper-drive at the end of the day.
So, what investment is going to get you to 10 million dollars quicker? It’s obviously going to be multifamily. And for me, those steps have been quickened even further through the process of syndication, some of the SEC guidelines and the changes with the exemptions over the last few years. They allow almost anyone to create and build wealth through apartment syndications or syndications in general.
So now that you can accumulate millions of dollars through raising money, do you want to go out and buy single-family homes or do you want to go out and buy multifamily? Typically, you’re going to want to buy multifamily for the same reason that most institutional investors do. And the reason is, as I stated, is that you can reduce a lot of your risks through owning multifamily as well as accelerate the wealth-building process through owning multifamily.
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