Small Real Estate Deals vs. Multifamily Investing: Which Is Better?x

Small Real Estate Deals vs. Multifamily Investing: Which Is Better?

This weekend, I put in a few offers on some multifamily properties that had caught my eye. One of them is smaller than the real estate deals I usually go for – but it’s conveniently close to one of my other properties.

Here’s what I’ve come to realize: there’s a huge difference between total units and manageable units.

Transitioning from Small Real Estate Deals to Profitable Multifamily Investments

When I first began investing in real estate around the Detroit area , I relied on third-party property management companies and bought deals wherever I could find them. Many of these were small real estate deals, sometimes located hours away from my primary real estate portfolio.

When we eventually parted ways with a subpar management company and took over ourselves, it became clear that we’d made a serious real estate investing mistake …

Counting units alone isn’t a reliable measure of a successful real estate portfolio .

If I’ve learned one key lesson from owning and managing 259 units, it’s this:

Managing one 10-unit complex is far easier and more cost-effective than juggling 10 single-family homes scattered across different areas.

Why I Prefer Investing in Multifamily Properties vs. Multiple Small Real Estate Deals Like Single-Family Units

Consider this …

With 10 houses, you’re dealing with:

• 10 separate property tax bills,
• 10 roofs, and
• 10 different utility accounts.

Similarly, if three of those homes spring leaks, you’re sending a plumber to three different addresses.

All this adds up to more time, more hassle, and more costs.

The real goal in real estate is to reduce expenses and maximize income – that’s how you win in this game.

That’s why I now focus on clustering my investments. I purchase properties within a defined area so I can centralize management and reduce costs wherever possible.

In 2023, I sold all my duplexes and four-plex properties to acquire one 56-unit multifamily property. Early next year, I’ll be doing a large 1031 exchange to transition our smaller multifamily assets into a single, larger building.

Remember the Monopoly rule: four green houses equal one red hotel.

That’s the insight I want to pass on.

Don’t fixate on unit count. Prioritize profitability and simplicity, and don’t hesitate to submit offers.

I’ll put out 100 offers, get responses on maybe 10, and possibly close on ONE of those.

It’s a numbers game, and you lose NOTHING by making offers – but you risk EVERYTHING by sitting on the sidelines and doing nothing.

Start Your Real Estate Journey by Investing in Detroit Real Estate

If you’re ready to explore real estate investing, I’m here to help! My wife Andrea and I co-founded The Stephan Group brokerage with a focus on helping new and seasoned real estate investors. Andrea’s team has experience in all types of Detroit real estate investing, from single-family homes to multifamily properties.

Want to learn more about getting started? We’d love to discuss how we can help you reach your real estate goals. Just fill out a quick form , and let’s get started!