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Multifamily vs. Single-Family Rental Properties

Residential Building

If you’re considering investing in real estate, you’re going to have two major options: multifamily properties or single-family rental properties. With a multifamily property, you’re going to be looking towards apartment buildings, condominiums communities, or if you look towards smaller-scale properties, you’ll have the option to pick between duplexes or triplexes. These are typically properties people consider for rental reasons.

On the other hand, a single-family property is a traditional home built for a household or a single-family. This can entail flipping and fixing the properties or renting them out to long-term or short-term tenants.

But which one amongst the two is better? Read on as we evaluate.

Single-Family Properties
This article will be considering that single-family means a family living in one unit. It could be a detached home, a condo, or even a townhome.

No Conflicts
One of the most prominent problems with apartments is that tenants don’t usually get along. When this starts happening, the landlord usually gets a call from a tenant, and they have to get involved to sort out their disagreements. This can be difficult since there isn’t much that a landlord can do.

The most you’ll be able to do is that you’ll send an email to both tenants to abide by their agreement, and that’s it. You won’t be able to do much about their minor grievances.

They Require Less Maintenance
An apartment’s tenants are usually harsher on the property than those living in houses. There is also no need to maintain a common area in a single-family home. If you have a condo complex or a townhome, you’ll need to have a property manager who can take care of the property for you. Moreover, it’s common to have several neighborhood occupants who care about your property with a single-family property.

Financing them is Easy
Financing is a complex subject, and it can also act as an advantage for a particular apartment. The money you can earn on a single-family apartment is possibly the best. With a fixed and long-term interest rate, they can be relatively inexpensive. In many cases, you can get a considerably high loan to value ratio in most single-family rental units.

Multifamily Properties
We’re including all residential properties in this category that have more than one unit into the multifamily category. Here’s why we like multifamily properties.

They’re Easier to Manage
This isn’t always the case since tenants that keep fighting may make your life miserable. But overall, since you have all of your rental units in one location can make it easier to manage these rental units. In some cases, you’ll only have to pay a salary to one property manager who will ensure the property is clean your tenants are paying the rent on time. They’ll also meet the contractors on your behalf and help show off the rental units, too.

One Roof
Since you have multiple units, you can benefit from the economies of scale. Let’s assume that you have a building of 20 units. If you replace the roof from one roof, you’ll be replacing the roof of 20 units at one time. The same will also apply when you’re painting any number of improvement items or other maintenance items inside your property.

Once you start crunching out the numbers, the price per unit will be significantly lower than the price you’d have to pay for a single-family home. Your marketing for insurance expenses or new tenants is another factor to consider, too. This way, you’ll be promoting all of your 20 rental units, and you’ll be paying a considerably lesser cost per unit.

Wrapping Up
If you think real estate is an excellent investment, we’re sure you can see the benefits of investing in a multifamily property or a single-family property. That said, it’s essential to keep an open mind while investing and try to include both in your portfolio to keep it diversified.

Published by Goodjuju Property Management Marketing