It's OK to Start Small in Multifamily Real Estate

It’s OK to Start Small in Multifamily Real Estate—But Plan to Scale

Starting with a small multifamily property—a duplex, triplex, or fourplex—is a

smart way to enter real estate investing. It’s affordable, manageable, and provides

hands-on experience. Plus, owner-occupant bank financing can lower the

upfront cost.

I have a friend who bought eight single family homes before he started buying

any multifamily at all. We did some math and realized that if he had started with

a 4-plex and then bought seven larger properties from there, his real estate

portfolio would be worth 5-8X more than it is today. The theoretical eight

multifamily properties outpaced the eight single family homes by a longshot.

With that said, I’m a believer in the approach of buying something smaller at

first, because it lets you experience real ownership: handling vacancies, tax

seasons, and tenant issues firsthand. These lessons prepare you for growth, and

you’ll quickly realize that managing more units doesn’t mean doubling or

tripling your workload.

Real wealth in multifamily real estate comes from scaling up. Consider this: if a

$600,000 fourplex gains 10% in value, that’s $60,000 in increased wealth. If a $4

million 40-unit building gains 10%, that’s $400,000 in additional wealth. Larger

properties also tend to offer more stable cash flow and better efficiency in

management and expenses.

The key? Getting started with something small but working your way up quickly.

Though you should feel you can start small, learn the ropes, and plan for

growth—whether through refinancing, partnerships, or reinvesting other assets.

Small multifamily properties are a great entry point, but true financial freedom

comes from thinking bigger.