Friends, Kris Krohn here. And today we are going to be diving deep into this world
of multifamily versus single-family. Which one's better? Which one's worse? Is
one better than the other? We're about to find out.
So, multifamily, single-family. Before I go into the pros and cons, I want to make
sure you have some context for how these two beasts are really different from
each other. First of all, single-family is just, it's
a home that is designed for one family occupancy, right? It's your basic everyday
home that the people live in, right? Multi-family is a commercial structure
that is designed to house many people. So, think condos, think apartments, right?
Think of a complex where you maybe have 10 doors or 20 doors or 200 doors.
There's a big difference between single-family and multi-family. And now,
we're going to explore kind of the pros and cons of is one better than the other or
are they just two very different investments depending on what you're
trying to accomplish? Now, hands down if someone were to go in the ring and
actually represent single-family homes. I'd probably be a pretty good candidate.
Because I have done thousands of these homes. But if I were to going to balk
someone in multifamily it, would probably be Grant Cardone. Because he's done out
there in a multi-family, he's crushed it. And Grants done some huge things. And so,
you know, today when we're talking about my strategy, grand strategy, I'm going to
tell you right now, I'm going to be fair. And I'm already going to tell you at the end
that there is totally a place for multifamily. But we're going to find out
really what that place is based on the pros and cons that we figure out right
now. So, in this corner, we've got
single-family and in this corner, we've got multifamily, right? And across, we're
going to take a look at what are the pros for both of these. We're going to say what
are the cons for both of these? And let's start with I want to compare 3 of
the most important things in understanding. Because first of all, you
need to understand that between these 2, one of them is an easier entry level.
One of them is easier to get into than the other. And between the 2 of them,
which one's easier? Well, pros, single-family, its we're going
to put up here easy entry. What do I mean by that? I mean, that dudem if I wanted to
qualify for a home to even move into, there are 3% or tiny percent down
payments. Where I can get in for a few thousand dollars and can control a
hundred to 2 hundred thousand dollar home. Or if I'm an investor and I'm not
gonna actually move into it, I'm going to put 20% down. But 20% on a $200,000 home
is $40,000, okay? It is a doable amount of money that the average American can play
with. But if you take a look at multifamily, I'm going to drop that as a con.
It does not have an easy entry. I'm going to say it has a hard entry. Which it means
nothing more than it just takes a lot more money to get in this game. Here you
can mean talking about 5 grand to 40 grand. Here you can be talking about
hundreds of thousands to millions of dollars. So, for the new investor, single
family is definitely going to be a really smart way to get involved. And
this can be really intimidating and you definitely don't want to screw that up
as your first project. Okay, first point definitely goes to seal family. And the
second point I think is going to go to single family as well. At first, it's
going to look like I'm being pretty biased here. But don't worry. Grant Cardone, multi
family. He's got a shot. I want to talk about how easy it is to find deals. Do
you know how many more single family homes there are than multifamily
complexes? I mean for every one of these, you know there's not very many of these.
Right? For hundreds of these, you have some of these. And so, I'm also going to go
so far as to say when it comes to the ease of finding a deal, one of the pros
of single family is you can find many deals. And as I'm out there actually in
the multifamily game, it's harder to find deals where the numbers actually really
make sense. So, I'm going to say fewer or less deals. But now, we've got to give it
up for multifamily. I mean, multi-family definitely can do some things that
single family cannot. For example, cash flow. If we take a look at multifamily,
they are going to crush it in the space of a cash on cash return. So for example
here, I've seen all sorts of deals where you can pick up a 12 to 18
percent cash on cash return. But when it actually comes to single family, you're
going to be picking up between 6 and 9 percent fully optimized. Now, if you
compare these numbers, basically multi families about double than this right
here. And if you think about it, you might have a lot of money and you're thinking,
"Hey, I'm just interested in going into a cash flow play." And when you step into
that, guess what you're not looking for? You're looking for accentuated cash flow.
Every month I want more money. I'm basically saying your cash flow can be
twice as big here is it can be here. So we're going to chalk that up is a huge win
for multifamily as opposed to a big con here. For single family is its capped on
how much cash on cash it can really return. Now, don't confuse that with total
ROI. Because what I'm about to say is really important.
In my experience, multifamily can deliver a 20 to 30 percent annual ROI.
Single family can also deliver a 20 to 30 percent annual ROI. Which means
in the long haul, they may be sixes. They may actually... Grant may not agree with
this but I'll tell you from my perspective. Both of them are really
great long-term investments. But if I'm getting less cash flow here then I have
more upside here. If I'm getting more cash flow here, I have less upside here
all things depending. They really are 2 very different beasts. But understand
they both can perform really well long-term. One is just going to pull ahead
when it comes to the cash on cash. The cash flow that it can produce for you.
And for that reason, we're actually going to say that when you look at
single-family and multi-family, they both actually do very well long term. So they
have really good long-term money. Technically, single-family in my opinion,
is going to be stronger on the long term family. One more thing that single family
has is you have some amazing liquidity here. Because if I have a half a million
dollars, I can do ten projects here. If I have a half a million, I can only do one
project here. But where this has liquidity, do you know what you have over
here? You have great stability. Meaning, if your house isn't rented out, you are
earning nothing. If one of your units has not rented out, you're still probably
earning very, very, extraordinarily well. If you're managing it appropriately. So
these 2, these 2 beasts really are really different. But they both have a
lot of strengths. And so, I'm going to call it a tie for today. I think they're both
hyper useful. What I want you to know is that whether you have a little bit of
money that you you need to be playing in the single-family. If you're brand-new, I
recommend the single-family. But if you feel like you've amassed some money and
you're saying to yourself, "I need more cash flow and I'm ready to step it up."
Then when you actually click the link and talk to a member of my team, I want
you to let them know what are your goals? What do you actually have to work with?
If you got no money, I'm going to be saying single-family. If you've got some money,
then we might actually have the conversation of multifamily of doing
some extraordinary deals there that have some incredible returns. And if you want
to actually take this knowledge and say, "I'm ready to actually dive in the game.
And actually want to get like some hands-on. "Kris, you've got inventory of
both single-family and multi-family. What's that about? Explain that for me.
Let's light it up." All you got to do is click the link in the description, I'm
going to break that down for you. We'll see you there.