Single Family vs Multi-Family

Single Family vs Multi-Family: Which is the Best Investment?

It’s no secret that investing in real estate can be a smart financial move. Real estate investments can generate reliable income and be a way to build wealth. If you plan to invest in real estate, you might wonder about single-family vs. multi-family properties.

Both can be beneficial, but they also have pros and cons. This post will cover some of the issues to consider when deciding between multi-family and single-family investing.

Single Family vs. Multi-Family Properties

Cash Flow

Multi-family properties tend to have higher cash flow than single-family homes. This rule should hold true as long as properties are in the same market. The property might cost a little more, but more units to rent should equal more revenue. You’ll also see more cash flow as the number of units increases.

Appreciation

Single-family homes usually appreciate better than multi-family properties. Part of this is because the market for selling single-family homes tends to be broader. You not only have investors, but you also have regular homebuyers. With multi-family properties, the buyers are almost always other investors. A family buying a single-family home looks at the property for its potential as a place to live. An investor only looks at dollars and cents.

Maintenance

The consideration of maintenance can favor both in different ways. With a multi-family property, you might have to maintain common spaces. You’ll also need to take care of landscaping. You don’t have common spaces with a single-family property, and the tenant or landscapers handle landscaping. However, if you compare a duplex to investing in two single-family homes, the maintenance consideration could change a little. A duplex is one building to maintain instead of two.

Management

Management is another issue that can be tricky. If you are talking about one single-family home to one multi-family property, the single-family will be easier to manage. It’s why many new investors start with single-family homes. However, the management issues might shift if you are talking about a triplex compared to three single-family homes. A triplex is still one property instead of three.

Stability

The stability issue can also be cut both ways. With a multi-family property, you have multiple tenants. That can provide a level of stability. Even if one unit is empty for a time, you still have income from the others. An empty single-family home doesn’t generate any income. On the other side, multi-family homes tend to have higher turnover. When you get a family in a single-family home, they usually want to stay there. Multi-family tenants are usually less committed to staying in the same place.

Are you interested in investing in real estate? Call us #855-644-5626 or contact an experienced Loan Officer . We would be happy to help you understand your mortgage options for investment properties. 

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