Have you ever wondered if multifamily investing is better than multiple small real estate deals?
This weekend, I threw out a few offers on some multifamily real estate assets I’ve been watching.
One of them is much smaller of a real estate deal than I would normally buy … But it’s in close proximity to one of my other properties.
You see, I’ve learned there’s a BIG difference between “UNITS” and “MANAGEMENT UNITS”.
From Small Real Estate Deals to Profitable Multifamily Real Estate Investing
When I first started investing in Detroit area real estate, I utilized 3rd party property management companies for my real estate investments. And, I bought deals wherever I could find them … Often, they were small real estate deals and sometimes even 2 hours away from my main portfolio.
When we fired that crummy property management company and took over operations, we realized very quickly that we had made a BIG mistake.
Unit count is a poor metric of a healthy and profitable real estate portfolio.
If there’s one thing I’ve learned from owning and operating 259 units, it’s this:
It is much more efficient and profitable to manage ONE 10-unit property vs. 10 single family homes spread out.
Why I Prefer Multifamily Real Estate Investing vs. Small Real Estate Deals with Single Family Homes
Think about it …
If you have 10 houses, you have:
- 10 tax bills,
- 10 separate roofs, and
- 10 utility bills.
If you have 3 leaks at 3 of the houses, you have to send a plumber to 3 different locations.
All of this costs you more time and more money.
And, the name of the game in real estate is:
If you can REDUCE the expenses and INCREASE the income, you will WIN.
So, that’s why I now focus on “clustering” my units. I only buy within a small box where I can centralize everything as much as possible.
This is a reason I sold all of my duplexes and my 4-plex to buy one 56-unit multifamily property in 2023.
In fact, I’ll be repeating this process early next year when we sell off all of our smaller multifamily assets to do a massive 1031 exchange into a larger building.
Remember the lesson from Monopoly: 4 green houses ==> 1 red hotel.
That’s the lesson I want to share with you.
Don’t obsess over unit count.
Focus on profitability.
Focus on simplicity.
And don’t be afraid to throw out offers.
I’ll write 100 offers …
I’ll maybe get 10 responses …
Out of those 10 responses, we MAY buy 1 of those.
100 to 1.
That’s the name of the game.
You have NOTHING to lose with making offers.
You have EVERYTHING to lose by doing nothing at all.
Ready to Start Your Real Estate Investment Journey with Detroit Area Real Estate?
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My wife and her team specialize in Detroit real estate investing and have worked with every type of investor from single family all the way up to multifamily.
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