single family property investment vs multifamily property investment

We all know investing in real estate can be both a profitable and risky affair. When it comes to the types of real estate investments you can make, one of the things you need to mull over is whether to throw your money into a single-family or multifamily home.

They can both prove to be brilliant investment ideas, and weighing up the strengths and downsides of each can help you in making a more enlightened decision. But don’t worry, we’re here to walk you through it!

Single-family Strengths

One major advantage of investing in single-family property is that being a landlord, you do not have tens of tenants to manage – just one. Compare this to multifamily properties where tenant issues can quickly turn into protracted affairs.

Additionally, single-family real estate investment allows you faster disposal of property in the event you do decide you no longer want it. This investment has the tendency to appreciate quicker as compared to its multifamily counterpart, and what’s more, it also seems to attract a larger pool of interested buyers.

Weaknesses

One of the major shortcomings of single-family real estate is cost. These properties hold more cost per unit, although the overall cost is usually lower.

When it comes to maintenance, often times a single fix in multifamily properties can be to the benefit of all tenants. When it comes to single-family property, each individual home needs its own individual repairs.

Then comes the increased risk resulting from vacancy. Vacancy in this type of property means you, the owner, has to sort out all bills and upkeep costs from your own pocket. At least until the houses find some occupants. Compare this to multifamily real estate where this risk is curtailed by the other tenants in residence.

That said, single-family investments put some kind of financial strain on the owner when it comes to dealing with the cash flows, especially given most real estate auctions demand full settlement upon purchase. There is a workaround to this financial conundrum, however: by purchasing real estate through online auctions, you can reduce it significantly as these require only a deposit upfront.

Multifamily Strengths

Single-family properties may have more potential buyers, but multifamily properties definitely have a larger pool of tenants because their rent tends to be lower.

Consider too the convenience of having to travel to a single location to sort out repair issues or tenant grievances as opposed to visiting multiple individual locations.

Weaknesses

Multifamily properties call for more involvement in property management. The problems stemming from one tenant can be overblown which may lead to issues with the other tenants that would otherwise not have been. Additionally, you have to answer to more families in regard to maintenance issues.

Multifamily homes also have a larger initial outlay, especially when we are talking anything above a duplex or triplex.

Weighing the benefits and weaknesses of each can help in determining which is best for you. Real estate investing can be a bit precarious, but it has the potential to become some great piece of business.