Full-time entrepreneur, investor, and coach, Michael Blank shares great insights and information about his main focus, multi-family real estate investing. Taking us from the beginning of his journey to settling with multi-family investing, he provides the pros and cons he has learned along the way. He provides some contract to investing in residential real estate, the one to four-unit properties. He shares his thoughts on the market value of properties and what determines it; why most people don’t involve in large real estate business; and how to find deals. Pushing forth the value of appearing experienced, he urges to get yourself educated and to build a team around you that will help you forward.
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On this episode, I wanted to do something a little different. I want to bring on a friend of mine named Michael who started off with single-family home investing and moved up into larger multi-unit properties. Generally speaking, we refer to that as a multi-family real estate, but for all intents and purposes, we're talking about apartments. I wanted to bring him on to give some contrast to investing in the residential real estate, the one to four-unit properties. When we talk about multi-unit properties, we're talking about two categories. There are the small multi-family properties, which are properties that contain two, three, or four units. Then we're talking about large multi-family properties and those are properties that have five or more units.

When we get into five or more units, we're referring to commercial properties. These are properties that don't qualify for residential or conventional financing. You’re talking about commercial properties fall under different guidelines when it comes to financing. The appraisals are more complicated and they're certainly far more expensive. Inspections are different. They're more expensive. Everything with multi-family, meaning apartment or commercial-based properties are more expensive and more complicated. There are more moving parts. They’re typically a slower transaction. They're taking longer escrows. They have pros and cons.

When you ask yourself the question, “Where should I start or which is better?” The answer almost always is, “It depends.” There are many factors that go into that decision. Most people, especially most people that we deal with as clients, are interested in and build portfolios of single-family homes, duplexes, triplexes, and fourplexes. Often, it's because they're more affordable, they’re easier to understand, and financing options are better because you have 30-year loans instead of your 25-year commercial loans. Thirty-year fixed loans are exactly that. They are fixed at a particular rate. Whereas the commercial loans that are amortized over the shorter 25-year period have five-year terms.

At the end of that term, you have to refinance that loan or extend or change the terms by renegotiating with the lender. Essentially, you're getting a new loan every five years with a shorter amortization period. The calculations are still based over 25 years, but you're having to go back and reestablish the terms every five years. In general terms, the pros of multi-family investing are more possibility for cashflow. This is a scalability thing. It's dependent upon the size of the property. Second is you have one loan or mortgage that covers multiple units. Keep in mind this is also true for two, three and four-unit properties as it is for 50-unit and 100-unit properties. You also have one insurance policy.

These pros and cons are not necessarily big things or big deals. They are just factors to consider. It's the difference between having one insurance policy on a twenty-unit building versus having twenty insurance policies for twenty single-family homes or duplexes or five fourplexes. The thing is it's not that big of a deal. You get the policy,