Deciding whether to invest in single family or multi family real estate is a complex decision that depends on a variety of factors. Here are some things to consider when making this decision:
Cash flow: One of the key factors to consider when deciding between single family and multi family properties is the potential for cash flow. Multi family properties tend to generate higher rental income, if the purchase price is right. However, when selected carefully, single family properties may also provide a good source of rental income, especially in high-demand areas.
Financing: The type of financing you are able to obtain can also influence your decision between single family and multi family properties. Financing for single family properties may be more readily available, especially if you are looking to purchase a smaller property, although making sure the numbers work on each opportunity is most important.
Management: Managing a multi family property can be more complex and time-consuming than managing a single family property. You will need to manage multiple tenants and leases, deal with potentially more expensive maintenance and repair issues, and handle unique tasks associated with running a larger rental property. This can be a significant time commitment, and may not be suitable for everyone. The upside for multi family is that there is just one roof, often one heating system, and one yard, so opportunities of scale would start to factor here as you grow a portfolio. When one unit sits vacant, the others are still covering expenses.
Appreciation: The potential for appreciation is another important factor to consider when deciding between single family and multi family properties. Single family homes tend to appreciate in value at a slower rate than multi family properties, but this can vary depending on the location and how long you plan to hold the property.
Overall, the decision to invest in single family or multi family real estate depends on your specific goals, financial situation, and tolerance for risk. It’s important to carefully evaluate your options and consider the pros and cons of each type of property before making a decision. If you’d like to discuss more about the various options of investing in real estate, please reach out. We’d love to chat!