When it comes to investing in real estate, is a single or mufti-family home better? A case can be made for either, but at the end of the day, the call is yours to make. It may depend on what you’re looking to do for your business model or an affinity for one or the other. It may depend on your budget, what income you are looking to make, whether you would like a more low maintenance rental, or whether you’re going to be living in the home you buy for a period of time.
Often when it comes to multifamily property investment, it can be beneficial because you live in one part of the home and rent out the other, allowing you to live somewhere for free while putting the rental income towards the mortgage, loans, or quality of the home. Single family properties also come with certain advantages, so read on to find out the benefits of both to help you decide which may be better for you.
Single family real estate investments are investments in assets that are free-standing residential dwellings that are constructed on a single lot and have no shared walls. They are made for occupation by one family or a couple (or a single person that likes a lot of space and wants to be a home owner). Single family homes are those that you see in the suburbs and on television, but what do they offer that mufti-family properties do not?
- More affordable.
- Higher rate of appreciation due to higher demand (the law of supply and demand.)
- Easier to finance.
- Easier to manage (less tenants equal less work unless you hire a property manager.)
- Can be less expensive than mufti-family.
- Usually require a lower down payment (you could need as little as 3.5% down where mufti-families may require up to 30% for a first down payment.)
- Lower insurance rates.
You’ve seen the benefits of single family versus mufti-family– now see why mufti-family may be better than single family property purchases for you.
- Potential for more cash income (more rent in total.)
- More control over value.
- Not just dependent on one tenant automatically (late rent, the tenant is being difficult.)
- Option to live in one unit and rent out the others.
- Pay off mortgages or loans with the added income more quickly.
- Not that much more maintenance, you’re already putting in the work and ,it’s still one house you have to maintain– just with more units.
- Not as devastated if you are renting to multiple tenants and one moves out (cash flow still remains intact.)
There are enough benefits and disadvantages to each that you may have a tough time deciding! If you are in it for making the maximum amount of money off a house, multifamily may be for you. If you are looking to have a property that continues to climb in value, buying a single family home may be a better option– you can rent it out and even sell it down the line and ultimately make a net gain.
Whatever you decide, put some time into weighing the benefits of each and then look at your budget, living needs, and ultimately what you are trying to get from your investment, and you should arrive at your answer. Thanks for reading, and happy house hunting!