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Apartments and Multifamily

Pros


Favorable financing

Everyone needs a place to live and homeownership is decreasing

Easiest entry point into commercial real estate

Cons


Expensive (low cap rates)

Very competitive

Needs a substantial amount of research

More work than other commercial property types

<aside> 💡 Apartments are incredibly popular, the difficulty is often in scaling. It doesn't become passive until you have at least ~100 units or if you invest passively in other's projects.

</aside>

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Troubleshooting

Commercial MultiFamily

Just like regular multifamily but more units. So regular residential multifamily is 1-4 units but when start having 4 or more units now its labeled as commercial.

The more units you add the more the model changes from running comps on your home (1-4 units) to more cashflow based (5+). Keep this in mind. SFH are usually based off comps, triplex and quadplex they look at cashflow and factor in DSCR, while 5+ units its mostly cashflow.