Small apartment buildings

[Karma]

Has anyone invested in smaller apartment buildings, i.e. 4 - 16 units? I'm looking to get into this in Central Arkansas.

[ricepig]

Has anyone invested in smaller apartment buildings, i.e. 4 - 16 units? I'm looking to get into this in Central Arkansas.

Nope, I keep my commercial real estate investments to businesses, generally Fortune 500 companies and I have a NNN lease. I prefer less money with more security. I know you can make more on apartments, but I don't want to mess with tenants, background checks, and all the other hassles that goes with residential leasing.

[onebadrubi]

Duplex's are where it's at I've been told.  One side should pay the bills, the other side should be profit...  But if it is just that easy then why are not a lot more doing it?

[ricepig]

Duplex's are where it's at I've been told.  One side should pay the bills, the other side should be profit...  But if it is just that easy then why are not a lot more doing it?

Zoning, tenants, headaches......

[hog.goblin]

I'm not a fan of single family rentals, duplexes, or small apartments.  Money can be made, but it's also a great way to make about 1 - 3% over time.

Apartments with around 60 units or more is where it's at.  However, you need to have people in place to do all things rice said aren't fun.  Because they aren't fun but critical.

[Karma]

I'm not a fan of single family rentals, duplexes, or small apartments.  Money can be made, but it's also a great way to make about 1 - 3% over time.

Apartments with around 60 units or more is where it's at.  However, you need to have people in place to do all things rice said aren't fun.  Because they aren't fun but critical.

Interesting. 60 units is a major entry point.

When a property is cash flowing, why do you only make 1-3%? Unexpected expenses?

[hog.goblin]

Interesting. 60 units is a major entry point.

When a property is cash flowing, why do you only make 1-3%? Unexpected expenses?

Many of the smaller units don't cash flow, or do but a short vacancy or moderate repair can wipe out a year's worth of positive cash flow.  There are exceptions of course, a unit with a long term good renter.  But for every one of those I find two where a tenant leaves with $10K in damage.  The more units you have the more tools you can employ to control that.

[Karma]

Many of the smaller units don't cash flow, or do but a short vacancy or moderate repair can wipe out a year's worth of positive cash flow.  There are exceptions of course, a unit with a long term good renter.  But for every one of those I find two where a tenant leaves with $10K in damage.  The more units you have the more tools you can employ to control that.

That makes sense.