Currently have two SFH, one 4-unit, and one 6-unit, which are pulling about $150K net income per year. I have $1M HELOC available that I haven’t tapped into and only $50K in reserves at the moment.

    I’m in a MCOL area, so SFH run about $400K and a 5-unit runs about $900K-1M. Rent is fairly proportional to square footage—SFH brings in about $2500/mo and a 5-unit brings in about $5000/mo, etc.

    I’m thinking ahead and trying to decide whether to buy another SFH in a year, a 4-ish unit in 2-3 years, or prepare myself to sit patiently and wait to build up the cash (and extra financing steps) to buy a much larger building, maybe 10+ units. I feel like I’m just reaching the point now where I need to make a longterm decision on how I plan to continue scaling.

    I know the typical response here is to just go for larger units since the shared expenses are lower, but I don’t think it’s that simple. It’s easier to get the timing right on smaller properties to find good deals. Having multiple smaller properties has given me more flexibility when it comes to financing. I also greatly prefer dealing with A-class properties at this point and most larger unit dwellings by their very nature seem to be in B-class or C-class neighborhoods.

    Other than what I listed above, what are some other considerations I may have overlooked?

    Scaling up: more small-unit buildings, or wait for a larger unit opportunity?
    byu/Harry_Coolahan inrealestateinvesting



    Posted by Harry_Coolahan

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