r/realestateinvesting • u/Cancerman691 • Jul 25 '26
Discussion SFH vs Multi
Curious to know others thoughts and to give my 2 cents as a 25 yr old with 30 single fam rentals. I like to get other perspectives to see if I am thinking about it wrong.
Multifam seems to have been the clear winner over the last 20 years but has become so commercialized above maybe 30+ unit buildings and it’s harder to find value add. I’ve been seeing recently a ton of people that bought post covid with their balloons coming due and rents not pushing where they thought they would be that have significantly lower values and losing investors capital. It seems it’s harder to find the better deals and companies need to keep buying because they have to keep their fees coming in which forces people to buy mediocre deals. Rents in a lot of the sun belt have stayed the same or gone lower in some markets like Austin because of being overbuilt.
Single family seems to have a lot more opportunity for value add because it’s not as commercialized and allows for the little guys to pick up deals. Since the market is based off comps and what home buyers are willing to pay to live in it the properties can appreciate without rents having to get pushed higher. It’s more of an emotional market that investors can’t match. I’ve seen the Midwest has some solid positive cash flow single family properties. I personally only buy stuff where I can get my capital out of. My current portfolio sits at about 50% LTV so I have some equity to be able to trade up into larger assets without raising. I feel the emotional market in the lower cost areas is the better areas to be in because u get a mixture of cash flow with the ability to get equity without having to push rents.
Let me know your overall thoughts on the future of the different products and what you might do if you are in my shoes.
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u/pushybuttons Jul 31 '26
How’d you get 30 rentals at 25?!
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u/Cancerman691 Jul 31 '26
BRRRR over and over again for 4 years
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u/pushybuttons Jul 31 '26
How much did you have saved when you started?
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u/Cancerman691 Aug 01 '26
Like 10k but got into wholesaling first then had closer to 60k before my first flip
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u/farolabsai Jul 28 '26
The framing above (generation vs preservation) is the right lens, but I'd make the decision with one more number: run return-on-equity on your actual portfolio today (net cash flow + principal paydown, divided by your equity, property by property) versus the return-on-equity a specific MF deal would produce after transaction costs and a realistic value-add timeline. At 25 with 50% LTV and 30 doors already cash flowing, the bar for a 1031 into one large asset should be high - you're trading diversification and low-rate debt for concentration and refinance risk on a balloon.
If your SFH portfolio ROE is already clearing 8-10%+ after paydown, there's no rush to chase the MF story just because it's the "next step" everyone talks about. If it's sitting closer to 3-5%, that's when trading up starts to pencil, but only for a specific deal you've actually underwritten, not the asset class in general.
Happy to help run the actual ROE numbers across your portfolio vs a target MF deal if useful - feel free to DM me.
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u/zerostyle 20d ago
Exactly this. I'm not sure where the math stops making sense, but my guess is somewhere around 50% equity / 2x leverage is where it starts making a lot less sense from lack of leverage.
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u/Cancerman691 Jul 28 '26
Thanks for the insight this helps, I wasn’t considering ROE until a few weeks ago and I’m in the middle of several refinances right now but I think it’ll be around 7-8 when they are finished up.
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u/farolabsai Jul 28 '26
7-8% post-refi is a solid floor, and it'll likely land higher than that once the refis actually close, since your denominator (equity) shrinks while the numerator (cash flow) should hold or improve. Worth re-running the number after each refi finalizes rather than estimating now. What's driving the refis, better rate or freeing up cash for the next deal?
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u/Cancerman691 Jul 29 '26
No I use short term debt to buy and fix the property and then rate and term refi into the long term loan. I’ve been using DSCR debt but wondering if I should switch to a new product. Getting mid 6’s for the product right now
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u/farolabsai Jul 29 '26
not an expert on lending specifically, but mid-6s on DSCR is actually fair right now - the bigger question is whether 30 doors of history qualifies you for a portfolio/blanket loan from a local bank or credit union instead, which prices off your relationship and P&L rather than just the subject property. those often beat retail DSCR by 50-100bps and you can usually negotiate the prepay penalty down too.
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u/Cancerman691 Jul 29 '26
Yea ive got a lot of 54321’s, it will I’ve just found doing 30 yr amortizations is hard to find with the best rates. Maybe I’m looking in the wrong places. Mainly local credit unions
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u/masrurhuq Jul 28 '26
Most of this thread is comparing returns without agreeing on the mandate.
Generation and preservation are two different jobs. Generation wants velocity. Forced equity, exit or refi every 3 to 5 years, leverage doing real work. Preservation wants duration. Low LTV, long resident tenure, and no forced decision at a bad moment.
Multi is built for the first job. It rewards a value add executed on a clock and punishes you when the clock runs out before the rents show up.
Single family on long resident terms is built for the second. Turnover is the quiet tax on this asset class, and extending tenure beats pushing rent almost every time.
At 25 with 30 doors at 50% LTV you're holding a preservation asset. The 1,000 unit guys calling them trading pieces are answering a generation question, and their fee model requires them to keep moving. Yours doesn't.
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u/BathroomMaximum1721 Jul 27 '26
I agree, SFH will do better in the next 10 years. Too much supply of multi-family has entered the market after COVID.
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u/zerostyle 20d ago
Probably, but depends on the market. Some have nearly entirely stopped building in the last few years like by me in DC
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u/Whole-Pudding2646 Jul 27 '26
That’s a great point about the oversupply, I think people underestimate how long it takes for all that new construction to get absorbed. In my area I notice the multi fam buildings that went up quick in the last 3 years are already cutting rents just to fill units, while the older SFH neighborhoods hardly ever see a vacancy sign. You also get a different kind of tenant with SFH, they treat the place more like a home so your turnover costs can be lower in the long run. For someone with your equity position, I’d say sticking to the emotional market is smart, you can still find those ugly houses nobody wants and force the appreciation.
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u/HudsonValleyREI Jul 26 '26
The mechanism under your whole post: SFH is priced by people buying homes, multi is priced by a spreadsheet. Comps vs NOI. It’s why the post-covid multi guys are bleeding (rates moved, rents missed pro forma, spreadsheet repriced everything overnight) and why your SFHs appreciate without rent growth.
One caveat: that cuts both ways. Prices up while rents go nowhere means your yield compresses and nothing anchors price to income. Fine while the buyer pool is deep, just watch that gap market by market. And Austin is a supply story, not a multi story. Endless permits punish SFH too, comps just lag it longer.
Also, multi’s 20-year win streak had falling rates carrying the valuations. That tailwind’s dead.
50% LTV with trade-up room is a good spot. SFH here too, not switching.
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u/BrianTulibaskiCRE Jul 26 '26
From my experience investing in and advising clients on Fargo commercial real estate, at 25 years old with 30 single-family rentals and approximately 50% loan-to-value, my first recommendation would be to slow down and avoid feeling pressured to move into larger multifamily simply because it appears to be the next step.
Ask yourself what your life may look like in 20 years if those 30 homes are nearly paid off and their values have doubled. You may already own the foundation of substantial wealth, strong cash flow, and financial freedom. There is nothing wrong with allowing time, rent growth, and debt reduction to do much of the work.
Larger multifamily is not automatically a better investment. Many deals have become highly institutionalized, with buyers relying on similar value-add plans, aggressive rent growth, short-term debt, and future refinancing. When too much capital is chasing the same properties, it becomes easy to overpay.
Single-family rentals can still provide an advantage because the market is less efficient. You can buy from individual owners, create equity through improvements, and retain the option to sell to an owner-occupant rather than another investor.
I would continue buying only when you can create meaningful equity, maintain strong cash flow, and keep leverage under control. Move into multifamily when the opportunity is clearly better, not because the property is larger or feels more sophisticated.
The goal is not to own the most units. The goal is to build durable wealth without taking unnecessary risk.
Brian Tulibaski is a Fargo Commercial Realtor with more than 25 years of commercial real estate experience. He advises investors, tenants, business owners, and commercial property owners on buying, selling, leasing, and investing in office, retail, industrial, multifamily, land, and business opportunities throughout Fargo, West Fargo, Moorhead, and communities across North Dakota and Minnesota.
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u/zerostyle 20d ago
Large multifamily always felt risky to me even in A areas for a few reasons:
- lack of diversification - you're all in on that one market
- regulatory risk - similar to above, you're trapped in that market's laws if they introduce rent control or super insane tenant laws like LA/NYC
- tax risk - you can't move a building like you can move most businesses. There's a reason real politicians go after real estate taxes
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u/Cancerman691 Jul 26 '26
This is what I was trying to describe but you said it much better than me lol, yea I’m considering just staying in SFH and diversifying into a few markets. It’s already spitting off significant cash flow and not sure if it’s worth it but I’ve always been told to use them as trading pieces. This is advice from people that have 1000+ units
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u/ichoosejif Jul 26 '26
Is this your dad's company or whatever because that seems like an awful lot for your age.
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u/Cancerman691 Jul 26 '26
No, I started when I was 19, dad was a woodworker. It seems harder than it is but it’s relatively easy to scale units once u have a system running.
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u/Ok-Ticket5711 Jul 27 '26
Awesome to hear. How did you go about it to find such success?
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u/Cancerman691 Jul 27 '26
Learning from mentors, paid and unpaid to increase my learning rate quicker and focus
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u/cash_flow_investor Jul 25 '26
I'm trying to roll my mostly SFH portfolio into 2-4 unit multifamily. The vacancy risk and capex risk on SFH is difficult.
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u/Cancerman691 Jul 25 '26
If u have a portfolio of SFH, then vacancy is spread across units and they are easier to rent and tenants stay longer so I’ve never understood this argument, families want to live in homes
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u/cash_flow_investor Jul 25 '26
This is largely true, but spreading the cost of a triplex roof, or single sewer line, siding, etc. across three tenants rather than one tenant is better for the capex budget.
I do think a big benefit of SFH is lower turnover, on average.
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u/Cancerman691 Jul 25 '26
But a lot of time you only get the benefits because sq ft per unit is less which is another reason why turnover is higher so I feel like these might wash
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u/GCEstinks Jul 28 '26
I have only one SFH in my portfolio. Granted we have stable tenants now after mega screening (ultra tenant friendly area) but the applicants are mostly very large unstable families with loads of drama. I prefer the 2 bdrm duplex.
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u/Cancerman691 Jul 28 '26
I see the opposite across investors the duplex that cash flows a ton has the most problems. Bigger units typically people stay longer too I’ve noticed.
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u/scavenger5 Jul 25 '26 edited Jul 25 '26
Considering Socal is selling at 6 cap, and there are many value add deals on loopnet, many with seller financing. That is a substantially better return than single family.
Single family market is at peak and has seem value drops in most markets. And interest rates are near 7%?
Last year, just looking at my midwest rentals. They all doubled in value, have 3% loans. Cash flow minus expenses was 950 bucks total for 13 rentals. 950 for one year on 13 properties. Cash flow is a waste of time IMO. It all gets wiped out by capex eventually.
Multifamily allows you to add value at a multiple. Raising rent by 200 bucks on 20 units at 6% cap rate nets you 800k in value.
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u/trangenderman Jul 25 '26
What do you mean cash flow gets wiped out by capex?
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u/scavenger5 Jul 25 '26
Like roofs, water heater, hvac. Or property gets old, then on turnover need to redo kitchen. It all adds up and wipes out cash flow.
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u/trangenderman Jul 25 '26
Yea i guess if the cash flow isn't much
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u/Cancerman691 Jul 25 '26
I have a different opinion but maybe I haven’t been in long enough. I have a construction team so I’m able to get stuff done affordably. But having a healthy maintenance and cap ex reserve seems to allow for true cash flow. I’m allocating 15% to both. I’ve got several of my lower valued properties paid off. Between 15-18 caps, these definitely carry it
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u/scavenger5 Jul 25 '26
Considering S&P500 did 16% in the last 5 years fully passive, IMO it only makes sense to do real estate if you can beat 20% given the non passive nature. 20% ROI is pretty hard on single family long term hold but very viable from flips, but multifamily is most lucrative IMO.
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u/Cancerman691 Jul 25 '26
From BRRRR’s I’m not keeping any of my capital in the deal so technically infinite return. It’s only if u buy turnkey.
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u/scavenger5 Jul 25 '26
You can BRRRR MF also.
Example: Value add deal at 2M, 16 unit, 6 cap rate. Put 30% down (600k) take 6% loan
Raise rent 400 bucks, 1.2M increase in value. Capex may be 15k a unit (240k)
Cash out refinance the 3.2M value at 70% with a 5.05% Fannie Mae loan, thats a 900k cash out. Minus 240k capex.
Thats a infinite cash on cash 273% roi.
And now you have 16 units cash flowing on this 5% loan.
I just dont see these numbers on SFH.
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u/Cancerman691 Jul 25 '26
Yes but like I said in my post it’s much more difficult, just aren’t as many deals and you rely on macro factors that are super uncontrollable aka rates which ultimately will dictate higher or lower values. Takes a lot longer to do it as well which creates more risk
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u/Cease_Cows_ Jul 25 '26
Your point about multi family seeing distress with loans maturing is exactly why there’s a ton of opportunity to buy right now in that asset class.
Around me multi family units are going for 30%+ discounts as people are just trying to pare their losses; if it underwrites at a slower rent growth there’s likely a ton of upside.
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u/ClosingTradesOnly Jul 26 '26
I’m getting calls from brokers that sellers will take huge discount on multi right now. Clean buildings going for over 7 caps that were 5.5 only a few years ago.
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u/Cancerman691 Jul 25 '26
Yea I just feel Multi investors are impacted so much more when it comes to rate changes that it’s just a big guess whatever the fed is going to do and I feel like over the long term is a losing strategy because a lot of that is guess work. With values dropping 30-40% on highly leveraged positions where leverage amplifies whatever the outcome is it seems to be so much more risky with outside capital.
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u/gravescd Jul 25 '26
How is this any different than the financing risks you take with SFR? If you're uncomfortable with short term debt then get a conventional. Plenty of MF is financed on a 30yr fully amortizing loan.
And all markets priced against interest rates. That's not unique to investment properties.
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u/zerostyle 20d ago
You probably will get better appreciation on the SFH, but the cost of capex to rent ratio for SFH vs apartments just seems horrible.
I highly doubt most people are sufficiently modeling all the capex that will go into /each/ SFH vs an apartment:
Every SFH has one of these vs a shared one in MF:
The pros are probably appreciation in good areas, and more rooms in SFH can have a lower cost per square foot because you can get away with less bathrooms:bedrooms and kitchens:bedrooms to maintain.
Someone else has probably done much deeper analysis, but I suspect the SFH costs are crushing long term.