Sorry for a two day delay…
So a couple of weeks ago we talked about how I wanted to get financial free again and how I was going to do it.
I said that I needed about 15 units to get there. I’m going to round that up to 16. 16 units because my investment vehicle of choice is going to be 4 -plexes.
Why 4 -plexes?
So many reasons. But l’ll keep it simple.
It combines the best of single family and multifamily investing
Now there are pros and cons to multifamily and single family investing.
The Big Con:
The most common complaint that people have about single family is that once the property is the vacancy issue. They say well if it is vacant you have 100% vacancy. Which is technically true for the time it is vacant, but unless you plan on having it vacant for the whole year that 100% vacancy claim is a little misleading. A more accurate vacancy rate is what it is over a year.
For example if your property was only vacant 2 weeks out of the year. Your vacancy rate was only 3.8%.
The Big Pro:
The biggest pro I hear about single family is they are easier to find and easier to finance. Well that makes sense since there are plenty more single family houses than multifamily properties. And it might be a little harder to get a bank to finance on a multifamily deal that is $1,000,000 than on a single family house for $100,000.
If you look at multifamily the pro and cons are opposite. The perception is you have a higher chance of being able to cover your cost with more units if you you have a vacancy. On the other hand it may be a little harder to finance.
Where 4-plexes make sense.
4-plexes make sense because it combines the best of both worlds. You get the security of having more occupancy to cover cost and you can even get FHA financing on a 4- plex if you live in one of the units.
Other benefits include that your are more likely to find a motivated seller in this asset class than in the larger sized units. These assets usually are owners by smaller investors who are probably managing the units themselves and maybe in over their heads.
So that will be my asset class.
I’m going to buy at least four 4-plexes this year!
The next post will be about how I will find these 4-plexes.
Enjoy the Journey!