Jonathan Cronin (video) compares single-family rentals to larger multifamily (roughly 30+ unit) investing across three main advantages for apartments: 1) More budget enables higher-quality property management and greater passivity; 2) More units create safety against vacancies/delinquency via diversification of tenants; 3) Larger assets enable faster and larger appreciation through centralized value-add improvements. He notes dependence on location, endorses value-add strategies, and offers an invitation for investors to connect.
Hey, what's up everybody? It's Jonathan. Today I want to talk to you about the difference between single family investing and apartments. Okay. And specifically bigger, larger apartments, you know, just say 30 plus units. And you know, my partner and I, we have both been successful individually in single family long term rentals, short term rentals, all kinds of different avenues. But we say all the time we wish we started in commercial, you know, same processes, maybe a little bit more paperwork, but it's going to in the end be bigger deals, return way more than what a single family is. But today my goal is, isn't to give you a biased opinion, is to give you facts about why, about the differences in single family investing versus apartment. So if you're in that place trying to decide which route you want to take in this in your next investment, or maybe it's your very first investment, let's talk about it. So I'm going to give you three points. Number one, okay? Number one thing to think about that I believe is an advantage apartments have over single family. It's going to be more budget, you have more room. So that means you're going to be able to be more passive. More budget. More passive. Right, right. So if I have the ability to charge and to have a nicer property management company, I'll have someone who's taken more ownership of the property, someone who's taken care of more needs of the property and not including me in on every little thing. And I'm going to be able to have a apartment that's running itself more efficiently at a higher level. And I'm not able to be, I'm not having to be a part of all the big decisions, decisions or emergencies that come up. Okay? So that's number one, more budget. I mean, if you think about it, just say 30 units, bare minimum is what we're talking about. I'm not saying we won't go below that, we've definitely gone below that. But it has to meet some criteria for us to be below that. I think 30 plus unit is a good starting place. When you're thinking about optimal passivity in the deal outside of being, you know, just a passive investor, a limited partner. Right. If you're actually wanting to buy apartments, you want to just scale there 30, just say 30 units, bare minimum. Just say everyone's paying $1,200 a month. You know, you're talking about probably maybe screwing the math up here, but just say 410,000 a year in income and you're, you know, you're able to charge 8%, you know, just say you're close to $40,000 for property management, for the, for the property manager and management companies. So at that level you're going to get a much better property management company versus somebody who's just living in, taking part care of it. But it's really a low level person or company, okay? So that's one. If you want to be passive, if you want to have somebody taking better care of your property, if you want to be able to truly have what is called passive income and not be in the day to day and not be working every day on it, you need to be in higher deals, bigger deals, okay? Number two, more units, more safe, okay? I believe this to be true. And this is specifically talking about delinquency and vacancy rates, right? So just say you have 100 unit, 95% occupied. You, you lose 15 people off the bat, okay? Overnight, 15 people walk away. You still have 80% of the tenants paying your bills, okay? So you have much better room right there. Whereas a single family, you're, you know, just say you have 10 units and 15 people leave. Say a recession hits or something like that, and then 10, 15 people, or I guess you got 10 units, you don't even have the ability. So if you have five people, you're still, you're at 50% now, right? You have five people leave out of 10 units, you have 50% now paying the bill. So just some things to think about, you know, or you can say, well, 15% of the 10. Either way, it works out to be much greater opportunity with more units and much safer of a vehicle. So number three, more appreciation in the bigger units. Now of course this is heavily dependent upon location. If you're not focused on value add, we as a whole focus on value add, value add, value add, okay? We really want to see the forced appreciation, not totally are not at all dependent upon natural appreciation, okay? And people call these deals appreciation multipliers. Everything's under one roof, okay? You go send a plumber to one location, not to everything. You send a painter, go paint the whole thing, you know, it's one location, not a bunch, okay? You don't have to, you know, underwrite every, every single location. It's just one deal. And so if you can improve the commons area on that one deal, you've improved 100 units or however many units you have, right? You improve, you put a dog park in that thing. There's all kinds of things you can do. And it increases an appreciation multiplier, right? We increase the value to the tenants in whatever way. Of course, if you break it down by unit, you fix the toilet in one unit, you know you're going to be able to create a wholesale deal. Right. There's going to be much better rates in fixing all the toilets. Right. So, so you have the ability to scale much faster because it's all under one roof and you have the ability to appreciate much faster, especially if you have a good location. So I hope those helped in throwing in a few things about, about what to decide upon how to, what, what to set your criteria at again. You know, we believe in single family. We've used single family and we've used even smaller multifamily. That does well. And you can replace your income there. You can 10x your income, but generally it's going to be a slower route. Right. You're going to have a lot. You're going to need to, you know, you want to find 10 single family houses, you're gonna have to find 10 different deals. Right. So if that resonates with you, great. I hope that video, this video helps you, you really understand the ball game or at least have an idea of what direction you want to go. So. All right, if you want to find out more about how to get into large multifamily and you want to connect with us on that level, let us know. We're. We would love to talk with you about a group of investors we have coming together, scaling each other's portfolios, learning from each other in terms of skipping the mistakes that each other's already made. If that interests you, let us know. I'll probably put a link in the description. All right, God bless. Have a wonderful day.
