Advice on size of first rental property.

I'm looking to invest in a rental property. As a first investment I am considering a single family rental or duplex. I'm hearing though that one should only consider multi-units of around 7+. Assuming I have the capital for a larger property, is this good advice?
In Buying Property - Asked by Tod K. - Oct 3, 2008
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Answer(s)

R. J. L.
Elk Grove, CA

Yes Sir: You spread the risk and increase the percentages by using higher number. Read Dave Lindahl (sp) book on Multi-Family Millions, check the spelling of the last name, it may need adjustment. Additionally, if you buy one or two units you can either be vacant for 50% or 100% of the time. Not good numbers for making money! Russ

Oct 4, 2008
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Conway R.
Owner/Investor
Napa, CA

In addition to R. J. L.'s great advice I would also offer that most properties over five units have a smaller pool of buyers so there is less competition to buy them. In addition the larger the number of units in a building typically translates to a lower cost per unit. when you buy a fouplex or smaller multifamily property you will be competing against buyers who may live in the property so there is an emotional component to the purchase translating to a higher price. Duplex with few exceptions are always the highest cost per unit of all multifamily buildings and the rent is rarely higher than a larger building.
I work for RE/MAX Commercial and specialize in multifamily. I publish a syndicated multifamily blog weekly feel free to read it at http://www.MikeBolen.com

Oct 4, 2008
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Tod K.
Owner/Investor
South Pasadena, CA

Thank you for the quick responses and the confirmation of this advice.

Oct 4, 2008
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JEFF E.
Broker/Agent
Montreal, QC

If you planning to be a serious real estate investor a Duplex to a 5 plex its not consider a commerical real estate investment it is a place to live where other people help you pay rent . Its categorize as residential.what's the diffrence between residential & commercial well first of all the price of a residential is determine by the MARKET(demand & supply)For instance, If there is more people than real estate product in the market place price will go up & vice-versa.For commercial real estate it's different. The price is dertermine by the INCOME IT GENERATE so the more money you make the more your real etate will worth.

Oct 6, 2008
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Matt D.
Owner/Investor
Franklin, TN

You can leverage your property management & maintenance costs a little more with multi-family/apartments. Think about it, would you rather manage a 10 unit apartment of 10 rental houses scattered all over town?.

Oct 8, 2008
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Gregory G.
Broker/Agent
San Francisco, CA

Are you going to be managing the property yourself?
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Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)968-6065
greg@nnnbrokersusa.com
http://www.gregorygarver.com

Jun 12, 2011
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