Pod Insights BiggerPockets Real Estate Podcast The Ultimate Underrated Rental Property of 2025 (for Small Investors) About this episode What’s the best rental property for the average investor? It’s not a single-family rental, it’s not a large apartment building, it’s not even a duplex or a triplex—it’s a “sweet spot” small multifamily. These investment properties, ranging from five to 25 units, make more money, are easier to manage, and help you scale faster to achieve financial freedom. Even large multifamily investing experts like Brian Burke are ditching the huge apartment complexes to buy these. But what makes these small multifamily investment properties so much better than their bigger and smaller counterparts? We’re discussing the massive investing opportunities in 2025 for these properties with Brian today and how new investors and those looking for a manageable portfolio can leverage these properties to reach financial freedom. These types of properties are still experiencing low prices with limited competition, which means that if you know about them, you already have an advantage. How long do we have until multifamily prices rebound and these investments become out of reach for regular investors? How do you analyze a small multifamily property to ensure it makes you monthly passive income? Brian shares his wisdom and gives an exact timeline for when it may be too late to buy. In This Episode We Cover: The rental property “sweet spot” for more income and fewer headaches Why it’s easier to own multifamily than single-family homes The multifamily real estate crash and why prices are LOW right now How to analyze small multifamily before you buy and which expenses most new investors forget What makes a “good” small multifamily real estate deal in 2025 And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Ask Your Question on the BiggerPockets Forums BiggerPockets YouTube Apply to Be a BiggerPockets Podcast Guest! Try REsimpli, The Only All-In-One Real Estate Investor CRM Software That Helps You Manage Data, Marketing, Sales, and Operations Grab Brian’s Book, “The Hands-Off Investor” Sign Up for the BiggerPockets Real Estate Newsletter Property Manager Finder How to Buy a Small Multifamily Property (A Step-by-Step Case Study for Newbies!) Connect with Brian Connect with Dave (00:00) Intro (01:54) The Rental Property “Sweet Spot” (04:31) Management is EASIER! (07:36) It’s On SALE! (10:53) How Long Will Opportunity Last? (13:38) “Good” Deals in 2025 (17:48) How to Analyze Small Multifamily (24:03) Can Small Investors Do This? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1100 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] . Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:05 Dave Meyer? Hey everyone, I'm Dave Meyer and this is the BiggerPockets Real Estate Podcast, where we teach you how to achieve financial freedom through real estate investing. Just recently, I was on a panel for the BiggerPockets Momentum Virtual Investing Summit with our friend, Brian Burke, and he said something really interesting. He thinks the sweet spot in real estate right now is properties with 5 to 25 units. And if you don't know Brian, he's been investing for a long time. He's been in the game for 30 years. He's been contributing to BiggerPockets since 2013. So he's one of the most successful investors in the entire BP community. He's also just one of those people who's been right so many times that every time he says something like this, I pay close attention.
0:50 Dave Meyer? Now, if you've heard him on the show before, you know that he's not shy about telling you all the things that he's not investing in. So when I heard Brian say he is interested in this asset class of 5 to 25 unit properties, I wanted to find out more, and that's what we're doing on the show today. On this show, we talk almost every episode about residential real estate, which is properties from single-family homes up to four units. And we sometimes talk about the other end of the spectrum, commercial multifamily real estate, mostly in the context of syndications that raise millions of dollars to go buy very large apartment buildings or housing developments.
1:30 Dave Meyer? This middle ground, though, of 5 to 25 unit properties sometimes gets lost in the shuffle. So I want to ask Brian, what makes those properties attractive? Whether we've hit the point in the market cycle where investors should be jumping on deals in this category? And then I'm going to ask him his advice on how investors can analyze, purchase, and operate this type of property. Let's bring on Brian Burke. Brian, welcome back to the BiggerPockets Podcast. Thanks for being here.
1:58 Speaker 01 It's great to be back again, even so soon.
2:00 Dave Meyer? Yeah, well, this is what you get for saying interesting things when we're talking in different venues. Brian and I were talking on the Momentum Summit, and you said something that really intrigued me about five to 12-unit properties. Can you just tell me and everyone why you think that's kind of a sweet spot right now?
2:19 Speaker 01 You have this kind of imperfect market in the small multifamily space, right? So you get into large multifamily, 100 units and up. It's a very efficient market. It's dominated by professionals who do it for a living. There's not a lot of like, quote unquote, "great deals" to be found. But the small multifamily space, that's where your mom and pop landlords live. That's where you have tired landlords. That's where you have deaths that lead to estate sales, and just all the kinds of things that happen in human life all happens in that smaller multifamily space. And as they say, that chaos and dislocation breeds opportunity. So I think there's opportunity in that smaller space.
2:58 Dave Meyer? And do you think it doesn't apply to even smaller multifamilies, or does this also apply to two, three, and four units?
3:05 Speaker 01 I think it applies to those two to four unit as well as it does that five to, really, I'd say five to 25-unit space really kind of fits into this bucket. All of that applies. When you get down to the smaller, like, two to four-unit space, there you have a little bit more competition from live-in, like, house hackers. You have some of that in that space, and I think you don't have the economy of scale that you have with that five to 25-unit space. So while the rules still apply there, I think that you get a little bit even sweeter spot if you're in this as a real multifamily investor to be in that slightly larger space.
3:45 Dave Meyer? Yeah, I've noticed that a lot. And honestly, why my personal interest has peaked to go into this commercial area is less about the economies of scale that you mentioned, but two to four units just seems super competitive. And I think it's BiggerPockets' fault. I don't know, but we've been pre- How valuable they are and they are, but you see now pricing on duplexes, for example, is just kind of crazy unless you're an owner occupant and it's because house hackers rightfully can pay more and still make those deals pencil. Whereas if you're trying to scale a portfolio, you obviously can't live in every property and you can't pay as much as the person who's going to house hack that property. So I totally agree with you on that.
4:31 Dave Meyer? At the same time, I'm like a little bit for some reason nervous to go beyond four units. Like, is it really all that different?
4:38 Speaker 01 There's nothing to be afraid of. You brought up a good point about the smaller ones having, you know, like maybe it's bigger pockets fault because you have all the house hackers coming in, right? But it's also part of the reason that that space is so competitive is you can get Fannie Mae loans with, you know, lower down payments. You can get FHA, you know, there's regular conventional real estate lending that's available to like a single family home buyer, the same types of financing are available in that two to four unit space. And that does create a different competitive landscape. Once you're five units and up, it's considered commercial. That means the lending guidelines are different. It means down payment requirements are different, but operationally it's basically still the same thing.
5:19 Speaker 01 Now, the larger you get, kind of in some respects, the easier it gets too. So I had a 540 unit apartment complex. It was easier for me to manage than my 11 unit. And, and that's just kind of part of the way it is as you grow and scale and get teams. But when you're starting out and trying to build a portfolio, this smaller multifamily space is a great place to learn. It's a great place to build a portfolio and, and believe me, you'll learn more than you want to learn, but that'll be really useful. And so don't be afraid of it.
5:53 Dave Meyer? The other thing that intrigues me is like, I personally got into real estate buying small multifamilies that were in Denver and there's kind of these, you know, cut up old mansions and Victorians. And recently have only been trying to buy purpose built small multifamilies because the organization of them, the consistency between. Between units does, in my opinion, make a really big difference. Whereas all these old buildings that weren't meant to be multifamilies that you cut up are just such a pain in the butt to manage and to fix. Whereas, you know, you buy a 540 unit, every unit is a carbon copy of each other. There maybe there's a couple of layouts, but you know, the, the systems, the appliances you
6:35 Dave Meyer? need, they're repeatable, they're knowable in a way that some of these small multifamilies aren't. So that, that part of it definitely appeals to me.
6:42 Speaker 01 Yeah, they can get a little crazy, especially when you get into these modified buildings. And, you know, there's, there's a lot of those, actually, there's a lot of them in Buffalo. When I was out there looking and bought this 11 unit, we looked at a lot of properties that were like two-story, single-family homes that got repurposed into duplexes. Where the lower floor is one unit and the upper floor is another unit. And there's all kinds of oddities that you find in that. And man, it runs the gamut. I mean, between shared utilities and just a lot of those buildings are older and then their systems are really, really tough shape. So there can be a lot of challenges, but there's also, you know, again, anytime there's challenge, there's opportunity.
7:22 Dave Meyer? Totally agree. I just, when you're reaching scale and, you know, when I'm trying to buy units in this part of my portfolio, I'm looking for ease of maintenance. And so it just seems like this five to 25 unit area could be good. But I want to bring up sort of the elephant in the room, which is, is it a good time in the market to actually pursue these types of commercial deals? But first, Brian, we do have to take a quick break. We'll be right back. Most investors only think about insurance when something goes wrong. A tenant injury, storm damage, loss of rent. Then suddenly the cheapest policy doesn't feel like the best one anymore. That's why a lot of BiggerPockets investors use steadily for landlord insurance designed
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11:06 Dave Meyer? Welcome back to the BiggerPockets Podcast here with Brian Burke, talking about a potential sweet spot in the market right now, which is rentals that have five to roughly 25 units. Brian was telling us a little bit before about what appeals to him. But I'm curious, Brian, you know, commercial has been in a pretty big correction over the last couple of years. Do you think we are approaching a good time to buy for this subset of the multifamily asset class?
11:32 Speaker 01 Well, that depends, Dave. Do you like to buy things at the top or the bottom?
11:36 Dave Meyer? Bottom.
11:37 Speaker 01 Well, then I think this might be the time for you then. It might not be the time for everybody. The challenge of doing that, though, is the best time to buy anything is when it's most uncomfortable to do so. I have a mentor of mine in stock investing. He says, "The stock market is the only market where buyers fear a sale."
11:56 Dave Meyer? Yeah.
11:57 Speaker 01 And I think the real estate market also kind of fits into that category. You know, when, when times are tough, people get scared and they don't want to get in. That means it's a good time to get in. Now, I can't say that today is the precise bottom of the market, but I can tell you that it topped out in the second quarter of 2022, and it's been on a downslide ever since. And if we're not at the bottom, we're close enough to it where if you make a move now on a really well-priced property, because you found some needle in a haystack, then I don't think you'll be sad that you did. This, to me, is a good time to buy. New inventory is starting to decline. Rents will come back
12:38 Speaker 01 when new deliveries start to decline in the second half of this year. So I think this is Really compelling opportunity in the small multifamily space.
12:48 Dave Meyer? I love hearing that because I am very interested in buying these right now. So, so that's very good news. I really do think this is a really interesting sweet spot for people. So hopefully everyone is also considering this because as Brian said, commercial real estate has been on sale for the last couple of years. But Brian, we are starting to see the residential market slow down right now. You know, I've said that I think we're going to have relatively flat prices this year. I think you, you sort of agreed when we were talking a couple of weeks ago. So can you maybe help our audience understand how and why the commercial space and the residential space don't necessarily move in lockstep?
13:27 Speaker 01 Yeah, people always like to talk about the real estate market as if there is such a thing that, you know, all real estate does the same thing at the same time. And there's a market cycle slide that you'll often see people put up when they're talking about real estate market cycles where the cycle goes up and it peaks out, then it comes down and then it troughs out and then it goes back up again. But I have a slide that's way better than that. It has a bunch of lines that are crisscrossing, you know, and all kinds of different like ways, because that's really what the real estate market looks like. It's looks like total chaos. Because you could have home prices in a slide while multifamily is increasing, industrial could be going up while offices going down
14:07 Speaker 01 and hotels are trading sideways. All these things can be happening. And what is also interesting is even within the same type of real estate, it can be moving in two different directions in two different locations. I mean, it might be where multifamily in Buffalo is on a tear, but multifamily in Los Angeles is on a downside. These could be happening at the same time. So we always have to keep that in mind. But you know, there's a lot of bad news that's been coming out about commercial real estate, multifamily, office especially has been in a really bad spot. What you have to look at is where in the cycle are we? And what are the chances that that cycle is going to bottom out and then start to move in the opposite direction?
14:49 Speaker 01 Now, if you're talking about going out and buying office buildings, yeah, it's, it's really Bad out there. Will they come back? That's debatable. You know, maybe they will, maybe they won't. But on the multi side, you know, you see new deliveries coming down. You see rent growth starting to flatten. It was negative for a while. Now it's flattening. When I look at rent growth forecasts for the future, they're trending up in most markets, starting later half of this year and into next year. So if you can buy before that's already happened, you know, what do they say? Like buy on the rumor and sell on the news. You know, this is kind of where in that rumor stage. So I, I, I think that this, you know, despite the fact that there's been a lot of turmoil, I just think that that, that's what creates opportunity.
15:32 Dave Meyer? All right. Well, now you're giving me FOMO and anxiety that I need to go buy something immediately. How long do you think this opportunity lasts? Do you think we're just starting and there's going to be opportunity for years to come? Or is this kind of like a right here, right now kind of opportunity?
15:46 Speaker 01 I think that we have a little bit of time. There's no sense to rush anything, you know? You can let this play out. I don't think that we're looking at a V-shaped recovery where all of a sudden we're going to have this immediate massive bounce. I think that this recovery is going to be a process. And I think over the course of the next couple of years, you're going to have some really sharp buying opportunities. And I think over the subsequent couple of years, you're going to see the market start to mature. You know, I, I made up a few sayings. I might've said them on one of your podcasts before. I don't remember which one, but people used to say, you know, about the multifamily market, survive till 25. These were the owners who were trying to just hang on. Well, they got to 25, but they're still in a lot of distress.
16:27 Dave Meyer? Yeah, nothing got better.
16:28 Speaker 01 Nothing got better. Their interest rates are still high. Their loans are still coming due, you know? And, and I had come up with a bunch of new sayings. End of the dive in 25 was my first one. And that meant that, you know, the market's going to stop going down. I mean, before it goes up, it first has to stop coming down. And I think we're going to reach that point this year. And then I think it gets fixed in 26, meaning that I think next year, we're going to start to see some of this work itself out. The market's going to get legs under it. I think you're going to be in investor heaven in 27, meaning there's going to be deals out there. You're going to see, you know, the, the stuff that you bought. You're going to get rent growth. You're going to start to see price growth. And I think if you wait until 28, you're going to be too late. Those are my, those are my sayings for the day.
17:11 Dave Meyer? I like this. All right.
17:13 Speaker 01 Take it for what it's worth.
17:14 Dave Meyer? So Brian, I want to ask you about property class within this space. Like, do you recommend people invest in Class A, really nice polished spaces, Class B, Class C? How do you see that trade off in this particular subset of the market?
17:28 Speaker 01 It really has to match to your risk profile and the amount of work you really want to put in. If you have a high tolerance for risk, and let's say, you know, you're like a really young go getter, like, I'm going to kill it in the real estate business and I'm going to go find this really super like below market deal, put in a ton of work and really turn it around. Buying Class C properties might be for you because there's some people that just won't touch them because they're really management intensive, it's really difficult to pull that off. It takes a lot of energy and a lot of time and it's a lot of risk. If you have that in you, that's a really great place to start.
18:07 Speaker 01 And I guarantee you will learn 10 times more about this business than you will if you want to just go buy Class A properties.
18:14 Dave Meyer? And more than you want to, like you said.
18:16 Speaker 01 More than you want, yeah, 100% more than you want to. But if you're kind of like moderately risk averse, going into that Class B space is probably a good, a good place to be. And if you're just absolutely like hands off person, like, oh, I don't want to mess with anything. I want no risk. I don't want bad tenants. I don't want to have to deal with any of that stuff. Class A properties is probably the best place for you. Now, you'll probably find that it's the least amount of return, but on a risk adjusted basis, it's a very good return. So, you know, you've got to match your personality and your risk tolerance and the amount of work you're willing to put in and then decide from there which class is right for you.
18:55 Dave Meyer? And I'm going to ask you a question you're absolutely going to hate, but I'm going to ask it to you anyway. You know, what is a good deal in this market, right? Because I know that cap rates are going to be very different in different property classes, different markets. But can you just maybe give us a little bit of a guideline for like how you would look for and spot a good deal in today's day and age?
19:17 Speaker 01 Yeah, I mean, a lot of people want to focus on cap rate and say, oh, a good deal means it's this cap rate or that cap rate. Forget about cap rate.
19:24 Dave Meyer? I know you hate that.
19:25 Speaker 01 I just hate cap rate. It's just such a useless metric. What you really want to think about is the cash flow and replacement costs. I mean, if you can buy a property for a price that's less than you can build it for, you're already starting off on solid footing. But remember, this isn't only called multifamily. This is also called income property. It's another way that this is referred to as income property. You don't go buy a 20-unit apartment complex because it's a nice place for you to live. I mean, sure, you could live in it, but that's generally not why people buy 20-unit apartment buildings. They buy it because it's income property. That means you got to look at what is the income?
20:08 Speaker 01 And if it doesn't have income, it's not a good deal. So when you're underwriting, you're going to look at your rent minus vacancy, minus operating costs, minus property taxes, insurance, minus interest. What's left? And don't forget about capital improvements. You're going to have water heaters that break. You're going to have parking lots that need to be resurfaced. You're going to have roofs that need to be replaced. Amortize the cost of those big-ticket items over their lifespans and adjust for that as part of your cash flow question. And are you in positive cash flow territory? And is the cash flow that you're going to receive enough to make the investment worthwhile? There's another old saying that I really liked that says, "All investments have risk,
20:53 Speaker 01 but not every risk is worth the investment." If you are going and buying a property that you have to put $200,000 of your cash into, and you're going to get 100 bucks a month of positive cash flow, you've got to really consider whether or not this is a smart investment. If you could go invest in a mutual fund, a stock, or whatever, and get a much better return. You want to get a return on your capital. So look at it from a return on capital basis, not a cap rate basis, return on capital basis.
21:24 Dave Meyer? Brian, I have more questions for you about these medium-sized multifamily properties. But first, we do need to take a quick break.
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26:51 Dave Meyer? We're back. Here's the rest of my conversation with Brian Burke. Now, just totally asking for a friend and for our audience, not for myself. But if you were to be interested in this kind of deal, how does the underwriting and deal analysis process differ from either single-family rentals or smaller two to four units?
27:12 Speaker 01 In this five to 25 arena, it's very similar to underwriting a fourplex. You're going to look at your rent, you're going to look at vacancy factor. And here's something that I think is really important that people miss. If you own a fourplex, you can probably, you know, fill that fourplex up and have almost no vacancies for long stretches of time.
27:35 Dave Meyer? Yep.
27:35 Speaker 01 But when you get into this five to 25 unit space, your property is going to follow the market. So if the market has 10% vacancy, you're going to find yourself 10% vacant. If you're 100% full, you're doing something wrong. So really look at economic vacancy factors, be respectful of what the market data is telling you about vacancy, about rent growth, about rental rates, because you're, you're going to be, you know, A byproduct of the greater overall market, it's really tough to beat it when you get into these larger properties. The other thing to think about is like the utilities, who's paying for them, who pays for what? Make sure you're quantifying that and you've got a good management fee in there to pay a really good management company to help you with it.
28:20 Speaker 01 I'm not really a big fan of the DIY approach. I know some people really like to do it that way, but I'd much rather have a really strong competent manager in there and overseeing what they're doing. So make sure that you're accounting for those expenses. Those are the big things to look for when underwriting in this space.
28:37 Dave Meyer? You said something that if you don't have vacancy, you're doing something wrong. Does that mean you're just undercharging rent?
28:44 Speaker 01 Yeah, you're undercharging rent. Yeah, you should, you should be at market vacancy. So if you've got 25 units and you're 100% full, your rents are too low.
28:54 Dave Meyer? What about the debt side of things? Cause for everyone who's listening, just, you know, when you get a residential mortgage, usually you can get 30 or fixed rate debt. That is not typically what you do with commercial loans. They're usually adjustable rate mortgages that have a balloon payment after three, five, seven, 10 years. So how does that factor into the underwriting? Or what should we all be thinking about when we consider commercial debt versus residential?
29:20 Speaker 01 Yeah, commercial debt is a whole different animal. You know, the best financing that you can find out there anywhere is the 30 year fixed, fully amortized loan. And those are great for single family homes. You can even find them for your duplexes and fourplexes. But that's not a thing in the small commercial multifamily space. Once you get over five units, you can sometimes find bank financing, especially if you have a relationship loan. If you've got a relationship with a local community bank, you might find some really attractive financing. I have that 11 unit building I told you about in New York. I had a local bank that financed it for me on a 25 year fixed rate, fully amortizing loan. And so, you know, in the smaller space, you can find that debt out there.
30:05 Speaker 01 When you get into bigger multifamily, that gets even harder to find, especially when you get over 5 million. You know, those, those loans are really. Difficult to find. They usually will have some type of prepayment penalty. They'll have shorter maturities, like five, seven or 10 years. At that point, you have to pay them off or refinance. So it does get a little complicated as the loan size goes up. But if you're under that five million mark, you can find really compelling financing from local community banks. That's my starting point for that size.
30:35 Dave Meyer? All right. That's really, really good to know. I guess the question is, assuming you can't get one of those great fix rate debts. Assuming you're getting a more traditional kind of loan, five, seven years, something like that. How do you underwrite that? Because do you just assume that you're going to get a refinance at some point? Because that seems to be one of the major problems that operators have been facing over the last couple of years, that they weren't able to refinance. So like, how do you manage that risk?
31:02 Speaker 01 You manage the risk with a longer maturity and that's the reason that a lot of operators are having that challenge right now as they got too short of a maturity. There was a period right after COVID where a lot of buyers, especially of larger multifamily, were buying with three-year bridge loans. And these loans were intended to buy a property, fix it up, you know, raise the rents and then get a new loan. That was the reason that you would get those loans, but they kind of got repurposed where these syndicators were using this debt as a crutch because they couldn't raise enough equity. So they would use these high leverage loans to juice their returns and require them to bring less cash to the table.
31:44 Speaker 01 But the trade off was is that they had three-year maturities and that might work when it works. But if the music stops and there's no place left to sit, that's, that's when things go wrong. So the, the challenge of that refinance is when rates go up, values fall. That refinance is very difficult. Outside of that, assuming that rates stay level or maybe they only go up a little bit and values do not fall, the refinance is certainly doable, especially if you've owned the property for a while. And that's why the longer term maturities really pay off. If you get a loan with a 10-year maturity, it's pretty sure that you'll be able to refinance in 10. Years, the market should have gone up by then. And if it did go down, it should have had enough time to come back by that point.
32:29 Speaker 01 And if it went down right before it was refi time, it already went up for eight or nine years. And you should still be in pretty good shape. It's the really short terms that will get you because three to five years is the blink of an eye in this business. It may seem like a long time, but once you buy a property, you'll find three to five years goes by really quickly.
32:48 Dave Meyer? Thank you, Brian. You've really demystified the underwriting process for me a little bit. It really doesn't seem very different from all of the regular residential underwriting that I've done. And hopefully everyone listening to this sees that this really isn't all that complicated. If you could underwrite a single family home or duplex, you can make some small adjustments and be able to underwrite these types of deals as well. But I want to sort of just talk about just strategically, Brian, if you think this is a good asset for just regular investors. You know, the average bigger pockets listener, someone who's, you know, going to buy a handful of units over the course of their lives to support their financial freedom.
33:28 Dave Meyer? Like, is this a better option than buying a bunch of single families or two or three triplexes or something like that? Why or why not?
33:37 Speaker 01 Well, I think it's a, it's a different approach. It's hard to say that one is necessarily better over the other because it's, a lot of this depends on your own individual circumstances. Now, with the larger the properties you get, the more units you have concentrated in one location. Now, that comes with advantages and disadvantages. The advantages are, let's say you have a 20 unit apartment building and you have 20 single family homes. Well, in the 20 unit apartment building, instead of 20 roofs to maintain, you have one roof to maintain. Instead of 20 property managers, because they're all in different places, you have one property manager. Instead of having to hire a landscaper to mow 20 lawns, there's one landscaper mowing, you know, one lawn.
34:16 Speaker 01 So you do get economy of scale, but the trade off is you get some operational complexity. You know, you get big enough, you might have to have an onsite person. You know, in California, if you have more than 15 units in one location, you have to have. Have a quote unquote onsite manager. So you know, that adds some complexity to, you know, the, the business instead of just being really simple. So there's trade offs. The financing is a little more complicated in the larger stuff, but I'm a believer in economy of scale. I'm a believer that in, you know, real estate investing, your journey takes you to larger properties. And I don't mean, you know, more square footage on a
35:00 Speaker 01 house. I mean, larger properties and others, more units in one location, because that economy of scale is what gets you cash on cash return, which eventually gets you retirement and single family homes can do it, but it's very operationally complex to have a lot of scattered houses in a lot of different places. So I, I personally advocate for a kind of a balanced hybrid approach where you might have instead of, you know, a hundred single family homes, maybe you have five 20 unit buildings in, and those could be in different locations. That's fine. You get kind of the best of both worlds by having some geographic and portfolio diversification, yet also some consolidation to capture economy of scale.
35:45 Dave Meyer? All right. I like it. I mean, I, we, you, you and I both are, I think friendly with Chad Carson. I asked him the same question. He said the exact opposite. If you all listen to this thing, he was like, go buy 75 single family homes. But I think I personally, I'm more of your belief because I've, I started with small multifamily. I have some single family and then I went sort of to the opposite where I invest in syndications and like the kind of stuff you do, which is, you know, hundreds of units, but I'm trying to fill out that sort of like middle spot that I, I don't have diversification and an ownership over. So that's pretty interesting.
36:16 Speaker 01 At one point I had 120 rental houses and at one point I had 4,000 apartment units.
36:22 Dave Meyer? Wow.
36:22 Speaker 01 I think it was easier to manage the 4,000 apartment units than the 120 rental houses.
36:27 Dave Meyer? That's amazing.
36:28 Speaker 01 He might've pulled that off really well, but I don't know. That's just me. I mean, everybody's, everybody's different.
36:35 Dave Meyer? I'm curious about timing though, Brian, because I totally buy the diversification aspect, but is this something new people should consider? Do you recommend sort of building your way up to it?
36:46 Speaker 01 I recommend building your way up to it as you're scaling to larger properties. I mean, it doesn't mean you have to buy a single-family house before you buy a duplex, but if you're going to skip single-family homes and go straight into multifamily, I would suggest starting with something that's in the one to four category, just because of the ease of finance and just learning and kind of getting your feet wet. And then I would go into that kind of five to 15 unit space. There's not a lot of difference in five to 15 units. You get over 15 units, you know, kind of in that 16 to 25, that starts to get a little bit more complicated. It might, it might behoove you to start in that
37:24 Speaker 01 five to 15 beforehand. I personally, I think I had a duplex first and then I went straight to a 16 unit and it was complicated for me to figure out. So I really always recommend climbing the ladder is a much easier way to get on a roof than to jump up on top of it. So, you know, no problem with starting small and working your way up.
37:48 Dave Meyer? That's good advice. I like that saying. You're full of good sayings today, Brian. I like that story.
37:52 Speaker 01 I'm trying.
37:53 Dave Meyer? All right. Well, thanks again, Brian, and thank you all so much for listening to this episode of the BiggerPockets Podcast. If you enjoyed this episode as much as I did, please make sure to give us a five-star rating either on Spotify, Apple, or wherever you're listening. We'll see you next time.
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