SINGLE-FAMILY OR MULTIFAMILY PROPERTIES? WHAT IS THE BEST FOR YOU
A QUICK COMPARISON BETWEEN SINGLE-FAMILY AND MULTI-FAMILY INVESTMENT PROPERTIES
Many people make the mistake of thinking that multi-family investment properties produce the most income for their owners. While this might be the case in most situations since these properties are designed to produce multiple sources of income, single-family homes can sometimes produce more income in some situations.
To help you decide which property is right for you, check out the quick comparison between the two below.
THE ADVANTAGES OF INVESTING IN SINGLE-FAMILY PROPERTIES
It’s easier to buy single-family properties below market value – While you can also find great deals on multi-family properties, it’s just much easier to find single-family homes below market value.
The rent-to-value ratio is higher. It’s often easier to charge higher rent on a single-family property than it is to charge higher rent on a multi-family property. Of course, part of this depends on the area in which the property is located.
Single-family rentals are easier to manage. Tenants in single-family rentals often consider the property their home, which means they take better care of it. Since multi-family rentals are apartments, people tend to take less pride in where they live, thus the landlord ends up having to do more work.
Single-family properties are easier to buy and sell, and they appreciate better.
THE ADVANTAGES OF INVESTING IN MULTI-FAMILY PROPERTIES
Multi-family properties have opportunities for increasing their value. Buying run-down multi-family properties, fixing them up, and then charging higher rents can increase the property value significantly.
Multi-family properties offer the opportunity to make more profit because there are multiple rentals under one roof.
You can live in one unit while renting out the others. This allows you to live rent-free while the other tenants’ monthly rent payments pay the mortgage.
At the end of the day, single-family properties are a great way to increase your wealth with little investment, to begin with. While multi-family properties make more income in some markets, single-family properties can make bigger profits in others.
If you’re a beginning investor, you may want to start small with a single-family investment first before jumping into bigger deals right away.