BiggerPockets Daily

The notion that investing in multifamily is always better than investing in single-family is false. The goal of real estate investing isn’t to own a particular type of property but to secure a reliable income. The reliability of this income doesn’t depend on the property type but on the tenant who occupies the property.

To show you what I mean, I will compare the financial performance of a typical fourplex in Las Vegas to the kinds of properties we’ve targeted over 16 years.

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In his recent article, BiggerPockets CEO Scott Trench did a great job enumerating all the reasons why multifamily is in the difficult position it’s in. If he had written these same things a year ago, I wouldn’t be writing this rebuttal—I would have simply said, “Ditto.”  

But I don’t believe that the picture he has painted is an accurate reflection of where things are headed. Here’s why.

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Most investment strategies touted by gurus involve first buying a course to learn their strategy to get rich in real estate. While subject-to deals, wholesaling, syndicating, BRRRRing, Airbnb arbitrage, and fix and flipping, when done correctly, have undoubtedly been ways to make money, they all involve an element of risk or hard work to find deals. 

There’s another way. This blueprint is for the risk-averse, those working full-time, interested in the tried-and-true investing methods, and satisfied with growing their portfolio and wealth over time.

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If, like me, you check mortgage interest rates like an expectant parent checks their wife’s contractions, you doubtless will have analyzed every type of loan product in an attempt to inch the currently high rates down. 

Famed financial guru Suze Orman recently appeared on CNN extolling the virtues of an adjustable rate mortgage (ARM). But to many American homebuyers, mentioning an ARM is like the Ghost of Christmas Past returning to haunt us once more: Weren’t ARMs partly to blame for the 2008 financial crash? 

ARMs were derided in 2008 because many Americans got into financial trouble. Once their interest rates adjusted upward after three, five, or seven years, borrowers could not refinance down to a lower rate and fell into foreclosure. So why is Orman—whose monetary advice tends to be conservative—suggesting we go ice skating on a financial frozen lake?

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There is no right or wrong way to invest in real estate. All that matters is that you’re comfortable with your strategy and positioned to generate a positive return on investment (ROI). However, it never hurts to compare all your options—and that means taking a closer look at short-term vs. long-term real estate investing. 

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When you’re talking to real estate investors, they’ll often tell you how many doors they own, meaning how many rental units they have in their portfolio. Stating door numbers, however, can often be misleading. Generally, the real metric to keep track of is cash flow because, after all, profitability is what counts in any business, right? 

Sometimes, though, the two can get conflated, and on occasion, owning just a few doors, irrespective of cash flow, can be a good strategy for building long-term wealth. 

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Get ready for the ultimate real estate adventure as the BiggerPockets Conference (BPCON) 2024 heads to the tropical paradise of Cancun, Mexico, Oct. 6-8. International travel is always exciting, but knowing it can also be tax-deductible really takes things up a notch. 

Traveling outside the United States for business can be a little tricky when it comes to taxes, but don’t worry—we’re here to guide you through everything you need to know.

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The biggest hindrance to building a real estate portfolio that allows you to leave your job and become financially free is getting past the hurdle of covering your living expenses. Decreasing your costs by living overseas could be the most logical way to build a real estate portfolio in the U.S. quickly.

Why the Cost of Living in the U.S. Makes Saving So Difficult

According to the Bureau of Labor Statistics’ Consumer Expenditure Survey, the average household earned $94,003 in 2022 before taxes and spent $72,967 (just over $6,000/month) on total expenses. Of that number, $24,298 accounted for accommodation, which amounted to around $2,000/month on rent or a mortgage.

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My first investment property was a C/D-class multifamily in Houston. I selected it primarily based on perceived cash flow. 

According to my calculations, the return on investment (ROI) was between 12% and 14%. And with a multifamily, even if one unit is vacant, I still have cash coming in. How could I lose?

And then I got hit in the face (wallet) with reality:

It was an older building, and maintenance was continual and expensive. Plus, the tenants and others almost continuously vandalized the property.

Rent delinquencies and evictions were frequent, and the process was lengthy and expensive. And I was left with a damaged property that needed hundreds or thousands in repairs before it could be rented again.

I ended up losing thousands of dollars each year despite doing almost all repairs and maintenance myself. This was completely different from the calculated 12% to 14% ROI.

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Owner financing offers buyers and sellers more opportunities with real estate transactions. 

Before entering this type of transaction, it’s important to know what owner financing is, how it works, who benefits, and who pays property taxes on owner financing.

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