EP464: Single Family vs Multi Family Investing Debate - Which is the ULTIMATE Strategy‪?‬ The Flip Empire Show

In today's masterclass, we have four awesome real estate investors. We have Dave Payerchin and Rob Swanson (Single-family) vs. Tim Bratz and Rod Khleif (Multifamily). Which asset class is superior? Single-family or multiple-family? Today, the guys go into a five-round discussion where they break down which asset class is better in areas of Acquisitions, Dispositions, Financing, Management, and Construction! All donations that come from this episode will go to fund We Are Graces, a charity in Guatemala that’s close to Alex’s heart. So who do you think won today’s discussion? Reach out to Alex to let him know!
 
Key Takeaways:
This is all in the name of charity! There are going to be five rounds in this masterclass. Which asset class is superior when it comes to acquisitions?  Multifamily construction is down 42%. Big investors are pulling their money out. What risks are there in the multifamily space? Rents in multifamily crashed when the financial institutions crashed. It all comes down to supply and demand. Instead of saying whether X real estate is good or bad, ask yourself what are the risks associated with your potential investment deal. It’s the multifamily guys’ turn. Why is multifamily a superior asset class when it comes to acquisitions? In 2008, Rod lost $50 million in single-family because he was too spread out. If you buy right, it’s one of the safest asset classes to invest in. From a risk standpoint, it’s much safer because if you have a house and it’s vacant, it’s 100% vacant. When it comes to scaling, multifamily is the way to go. Dave and Rob rebuttal. You can structure a single-family portfolio where the maintenance is on the tenant. People only live in apartment buildings because they’re just saving up to buy a house. The first financing that dries up is not single-family, it’s multifamily. Banks think it’s too risky in times of crisis. Who won this round? Let’s back up! The guys do a quick intro about who they are and their experience in the industry to give you context. The next round: Dispositions. Why is dispositions superior in the multifamily space? Legacy wealth is built by buying assets and giving safe housing for your tenants. Single-family is too transactional. You’re buying these assets for lifetime cashflow. Single-family is unfortunately a job. Why is dispositions superior in the single-family space? Where are you in your journey? Both of our multifamily investors started in the single-family space.  If things get bad, who can you sell your multi-million dollar apartment building to in a bind?  The multifamily guys’ rebuttal. Multifamily cash flows extremely well. The next round: Financing. The single-family guys weigh in. It’s far safer for the investor to raise capital on a single-family home. Remember, big money is pulling out of multifamily. The market has already started to change. When Wall Street stops buying the debt, everything crashes. The multifamily guys give a rebuttal. Remember it’s a team sport in this business. Tim got his portfolio of $330 million of property in under five years. He’s only personally invested $125,000 of his personal money into his portfolio. A private lender is more at risk than in a syndication. No matter what asset class you choose, you can get burned on a deal if you are not careful. The next round: Management. Rod and Tim go first. It took all day of driving to get all your single-family homes fixed. All. Day. Multifamily? You can hire staff and have them handle it all in one go. Logistically, it’s a no brainer. You have to manage the management company, but that’s only an hour a week. Multifamily management companies know their stuff. They don’t mess around. Single-family? It’s usually a disorganized realtor. The single-family guys weigh in about management. People don’t know what rent you charge in a single-family because everyone is so scattered. You can standardize your construction work so that ev