5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t)

by | BiggerPockets.com

Let’s get ready to rumble!

I say this halfheartedly because of the pride held by both the single-family home investor and multifamily investor. I am going to tackle a highly contested topic on BiggerPockets: Is a single-family home a better investment than a multifamily property?

Unfortunately, I am not going to give you a yes or no answer. I am going highlight the reasons why I find multifamily investments to be superior for my investment goals, and you should always analyze an investment based on what you are trying to accomplish. My objective is to persuade you to join the “dark side” a.k.a. multifamily investing. 

5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t)

1. Economy of Scale

When I first began investing in multifamily properties, I focused on smaller units. I owned a few duplexes spread out across the city. Why did I choose this path? This seemed to be the path of least resistance, and in my mind, it was easy to achieve. It appeared to be a sound strategy for me at first, but I quickly realized that each duplex had to be maintained separately. Each property had to be landscaped, the snow plowed, the mechanicals for each property serviced, the roofs and driveway kept in good condition, etc. I came to realize that it would be very difficult for me to achieve an economy of scale by owning a vast array of units spread out across the city, especially as an out-of-town investor.

Related: How Big Should I Aim for My Very First Multifamily Purchase?

What I quickly realized when we purchased our first 25-unit complex was the economy of scale that was present. What does that mean? Since all of our units were in one location, the per-unit expenses were much less. For instance, there was one lawn to mow, one garbage bill, only a few roofs to maintain, and collecting rent was much easier. All the tenants were within walking distance of each other. No driving from one home to the next to evict a tenant. This economy of scale made it much easier for us to manage our investment.

Our goal was to build a business with real estate, and multifamily properties would allow us to scale up quickly and grow the portfolio. It would be much easier to hire a maintenance crew and managers to help run our business. At first, we employed a resident manager. But as our portfolio grew rapidly, we were able to hire full time employees to provide the services to our property.

In my opinion, it is much more difficult to achieve this economy of scale if you are purchasing one single-family home at a time. It can obviously be done, as many of the BiggerPockets members have shown, but multifamily properties are the ideal vehicle if your goal is to build a sustainable and growing business because of the ability to serve more “clients” in one location, along with achieving a higher per-square-foot rent than you can achieve in a single-family residence.


2. Less Work to Buy

This second reason may seem rather obvious, but I think most investors do not take into account the expense and time it takes to acquire 25 single-family homes as opposed to one 25-unit complex. Even if you bundled several homes together, you are still looking at multiple closings, not to mention visiting all of these homes before you put in an offer. Wouldn’t it be nice to visit one property, negotiate with one owner, come to terms with that single owner, and perform one closing? This reason alone will allow you to focus on your company and grow the business, not to mention the time and expense you will save.

3. Spreading Risk Over More Units

If you own a single-family home and it goes vacant for two months, guess who will be paying the mortgage? YOU. But if you own a 6-plex and two tenants decide to vacate, you still have four rents coming in to cover the expenses. Multifamily properties allow the investor to limit their downside risk by having multiple tenants pay the expenses. Once again, the investment lends itself to the investor model, where the revenue stream will be sufficient to pay the expenses and generate cash flow at the end of the month.

4. Forced Appreciation

Single-family homes are usually purchased based on the sales approach. That is, the “comps” in the market usually drive the value of the property. What is a 3-bedroom, 2-bath selling for? The home is compared to similar properties in the market. In contrast, multifamily properties are purchased using the income approach. Click here to read how to value a multifamily property.

Now, why is this distinction so important? You have much more control in a multifamily property to “force” the appreciation of the property by driving up the net operating income (NOI). Click here to read how to force the appreciation of a multifamily property. There is no waiting for market forces to drive up the value. If you employ a sound repositioning strategy to your investment, you will be able to generate wealth in a relatively short period of time. I think this is one of the biggest and most important distinctions.


Related: How I Bought a Multi-Million Dollar Apartment Complex at the Age of 26

5. Less Competition

To most investors, this may not seem apparent. But as I read through the forums on most real estate websites, most of the discussions are centered on fixing and flipping and wholesaling, two strategies that focus primarily on acquiring single-family homes. This increased competition ultimately leads to margins being driven down, and profits suffer as a result. In the Northeast, there are countless investors chasing these investments.

In the multifamily space, many investors possess a limiting belief that it is difficult to buy an apartment complex, and they never enter the arena. This faulty thinking has been changing the past few years, but many investors still hesitate to explore the possibilities of jumping into multifamily properties.

My hope is to have provided enough evidence to at least have you consider the benefits of multifamily properties. If you decide to join the dark side, please leave me a comment below and let me know what persuaded you. Please include below what your preference is and why.

We’re republishing this article to help out our newer readers.

Do you prefer single-family or multifamily investments? Why?

Let me know your thoughts with a comment!

About Author

Gino Barbaro

Gino Barbaro is a father of six and the co-founder of Jake & Gino LLC, a real estate education company focused on multifamily investing. He has grown his portfolio to 674 units in three years and is the best-selling author of "Wheelbarrow Profits".


  1. Jim C.

    Hey Gino- Since you own both SFRs and Multi’s, do you find that the tenants in the SFRs stay longer than in the multis? I too own both, and there seems to be a HUGE difference in SFR tenants vs. Multi tenants in terms of length of occupancy. Also, I find that my multis provide me with MORE headaches due to tenants not getting along, noise issues, and the list goes on. What is your take?

  2. John Barnette

    Exactly Jim Carson. I agree with every point in the article. However I too have found much more turnover, much more tenant maintenance, and more headaches (or at least different headaches) than SFR or even condo investing. In terms of forced appreciation. Yes from a numbers only perspective that makes sense. If you can raise rents and/or reduce costs and keep the units full.

    You can force appreciation in SFR and even condo as well if you implement a BRRR strategy and buy fixers at a discount and then fix up to rent and not flip. I also think you will see higher rent appreciation in SFR rental than apartment rental. Though likely market dependent.

    SFR you can have tremendous appreciation due to market appreciation and comping to other similar houses. Or buying a fixer, rent it out a bit…later get tenants out and freshen it up and sell it retail to an owner occupier in a hot market. You are not “forcing” the appreciation as much as strategically buying the right kind of rental home assets and exiting at a strong market cycle. An owner occupier will pay a premium over investor.

    Also financing for up to 10 individual 1-4 unit properties is lower cost than commercial apartment financing. The ease of financing can go either way though depending on circumstances.

    Do a mix of both. Some cash flow multi’s in cash flow markets and some strategically bought SFR’s in traditional appreciation markets when it is a buyer market.

  3. Chris Jackson

    I agree with this article and both Jim and John’s comments here.

    We have both types of assets in our portfolio. The one point I would disagree with is the competition aspect, just from a market cycle perspective. I can beat out 80% of all the flipper wholesalers HGTVers right now in the SFR game. But not in multifamily currently even with our experience and ability to close.

    The move right now in the MF cycle is to do both. Use your multifamily knowledge to try to mitigate all those items in the SFR game that it make it tough and time consuming to buy 10 SFRs vs a 10 unit building, but get the advantage of those item mentioned by Jim such as longer tenancy less PM work per tenant.

    Also with many SFRs in a portfolio and the demand for yield from MF investors out there, if you package up a well performing 10 unit SFR package you would crush the available options out there for single 10 unit buildings. You can actually get income approach forced appreciation and purchase financing options if your SFR portfolio is done right. We are getting interest from buyers in our SFR portfolio for that very reason.

    Gino we actually prefer MF for the very well articulated points you listed. I am also not suggesting the novice investor go out and try to make a go of SFR investing with hopes of illustrating the points I am making to have an ‘easier’ path to success to a multi unit portfolio.

    I strongly believe though that there is opportunity in SFR portfolio development with a multifamily lens.

    • Gino Barbaro

      HI Chris
      I wrote this article with the intention of SFH investors to consider the multifamily space and spark up an intelligent debate. I have no agenda other than to educate and portray my own personal experience.
      thanks for the comment

      • Chris Jackson

        Oh I know. Its a great article. Its the reason I got into multifamily years ago. Its the reason we will continue to focus on multifamily. I also tend to like hybrid models that allow an investor to be nimble which this article gave me the chance to pontificate on. 🙂

      • Rob B.

        Hi Gino, I am a Newbie in Which I have never purchased a 1st home let alone any other real estate.
        This is an area that I would like to pursue this year as I’m winding down in my career.
        My questions are…
        Is it harder to purchase a 4 plex vs a duplex and are there different tactics I need to take for the acquisition of a 4 plex?
        2. I live in Washington state and would like to purchase my first property As a house hack 2,3,4 plex.
        I think since I haven’t got in the real estate game yet that this will be the least path of resistance to start building wealth and security, would you agree or have a different path or mind set going in to this?
        3. Do I want to start an LLC for my first property/home if I’m going to keep investing after I purchase and/or do I need some sort of umbrella LLC.
        I’m still reading as much as I can from BP and learning but I’ve only been since last podcast 12-28-18
        Thank you so much for any information and hope I don’t sound to green

        • Gino Barbaro

          Hi Rob
          You have tons of questions
          I want you to focus on why Multifamily
          Continue to educate yourself
          If you are still serious about the niche, I would seek out a mentor/coach and get some one on one mentor ship. You have some terrific questions

  4. Hey Gino! Nice article. I disagree with multi over sfr, but there are advantages to both.

    I would say you can get more diversification with SFR. Yes if you have one 6 plex verse one sfr, it hurts more to have the sfr vacant. But the 6 plex is usually much more expensive than a sfr. You can usually buy a few sfrs for samr money as one 6 plex.

    I have also seen meth labs or other problems shut down an entire complex, where having multiple sfrs would be much safer than all your units in one building. If the market tanks for investments, you really only have one buyer with multis, and a much smaller buyer pool. With sfrs you have owner occupants who will always need a place to live and you can sell to investors.

    With single families my tenants take care of the yards and pay utilities which is so nice.

    I think a lot depends on the market too. Where I am everyone wants investment properties and multis are way too expensive.

  5. Thank you for the post. I really enjoy the site. This is one topic that I think about a lot. I have always been a single family investor and buy / hold. I am attracted to the idea of one day trading in for an apartment building or even a few smaller buildings. The main concern that I have right now is this notion of rising interest rates. People often write articles about the benefits of multifamily but I would love to see someone write about the topic of the disadvantages as well. We are sitting at the lowest interest rates in decades and as cap rates rise, values decrease. Investors are buying yield and there is evidence that rising interest rates have wiped out fortunes. I know the arguments are that there may be opportunities to raise rents but what if rents remain stable and interest rates soar? A good sensitivity analysis is important when looking at properties in the 5-10 year hold range. If the time frame is 15-20 years, I guess it becomes less of a concern. Would be very interested in different opinions!

  6. Hello Gino,
    This is a good article, which has helped me confirm my interest to purchase a multi family unit within the next year. I will continue to educate myself on this type of investment.

    Thank you and keep writing.

  7. Mike Dymski

    You can flip or BRRR the right kind of apartment complex just like a SFR and have much of the rehab completed by multifamily vendors and supervised by management companies. Your property value and net worth increase with every unit turn…it’s like a bunch of mini-flips or BRRRs in one location and within one transaction.

    • Gino Barbaro

      I agree with you wholeheartedly. I am trying to make the readers think big or at least outside the box. How many 7 figure refis can you do with SFH? My goal is to have my capital out of the investment, still cash flowing, non recourse and the capital moved to another deal. To me, this is true wealth creation. And it can happen very quickly with MF. I’m not saying it can’t with SFH, but one MF can set you free financially.
      I am going to write an article this week talking about the positives of SFH, of which there are.

  8. Rachel Feser

    Are any of you out there who buy MF able to negotiate a lower down payment percentage? If so, how do you do it? Who do you work with? Doesn’t the higher down payment required for MF (compared to that required for SFR purchases) end up really being a big drawback? Thank you!

    • Gino Barbaro

      It depends upon your level of education and your experience. On our last deal, we put down 15% and got one year interest only.
      The bigger down payment can be a drawback, but if you learn how to utilize owner financing, yo may be able to put less down

  9. Rachel Feser

    Thank you for your response, Gino! Would you recommend not buying MF unless you can get the lower downpayment? Also – I’ve asked others this before – are there specific cities you recommend buying in? With good demographics/stable renters? Thank you!

    • Gino Barbaro

      Down payment should not be a deciding factor in investing in MF, if you find a great deal is of more importance to me. I have written articles on BP discussing investing outside your market with job growth, demographics, etc. Please read them. I think it will answer your questions

  10. Karl B.

    I think a lot of multi-family investors begin with a duplex and then move up. The duplex is like ‘training wheels’ and I started with them when I began multi-families. Of course, apartments are much easier and have a better cash flow but I can understand why newer investors would rather begin with a duplex as it’s much less intimidating to a newer investor.

    • Gino Barbaro

      Hey Karl,
      I did too. I thought they were a great way to cash flow and get a bit of appreciation. The market has escalated right now, so appreciation may be hard. But I tell a lot of students to buy a duplex, live on one side and then rent out the other. A great way to test the water and see if you like real estate.

  11. Michael Le

    Timely article for me since I’ve been looking into this real hard recently. Thinking of signing up for the CCIM courses to get educated. Beyond going through your duplex training wheels, how did you get educated on the MFH side of things?

    • Gino Barbaro

      Hi Michael,
      find people who are investing in the market right now, and learn from them. Keep reading and listening to podcasts on BP.
      I found a coach and learned from him. It took several months but I became proficient and then I started to invest.
      It can be difficult to try to learn this industry on your own. That being said, people do it every day. I just think their learning curve is longer and they commit more mistakes, which can lead to quitting.

      • Michael Le

        Thanks, Gino. I totally agree. That’s how I got into SFR. Found some people who were doing it and latched on to them until I got comfortable to do my own. I guess I should have extrapolated that thought process to MFR. I’ll just have to find someone in MFR, which as you said aren’t as many or easy to find. At the same time I’ll continue my studies so when I meet someone they know I’m taking it seriously.

  12. jason mang

    Hi, great article. Im currently purchasing singles, doubles, tri’s, and 4plexes in Rochester NY. It is going well and the numbers look amazing. I believe I am buying well in areas where my property manager can help me to be very successful. I understand that I will have a lot of driveways, roofs, lawns, etc… to maintain, however I will still be successful. This article makes a lot of sense and I love the idea of adding value to force appreciation.

  13. Michael Bishop

    I really enjoyed reading your article, Gino. I wrote a similar one, although mine has a bit more focus toward syndication. You can see it here:


    You had some very interesting points that I hadn’t even considered; (1) less work to buy and (2) less competition. I think a lot of investors just think multifamily is bigger than them and fear an entry barrier that simply isn’t as big as they assume.

  14. New to BP and very interested in MF investing. You mention a coach or mentor? How do you suggest one goes about finding one? I live in central NJ and am very tentative about buying multis on my own without some experienced advisors.

  15. David Thompson

    Hi Geno
    Well laid out points. I would also add professional on site property management especially as you get into larger apartments is a great advantage. It more easily fits into the economics of affordability vs SFR where professional management can often not make economic sense. This frees you up to be more of an asset manager focusing more on strategy vs tactical and enable you time to focus on more acquisitions.

  16. Daniel Letts

    I am new to BP and have experience in building MF properties . I am interested in restarting investing . How hard are MF properties to locate out of area (state). Am in California and also find it hard to locate properties that have a good ROI in mid state area .

  17. Branden Bufford

    I’m heavily considering this. My wife finishes business school in 2020 and we want to be in an owner occupant unit for 2 years to live under our means, pay down debt, and also make money at the same time. It’s a short term sacrifice for a great long term return. I’m sure HELOCs are bigger on multifamilies and can allow for just more opportunities.

  18. Maria Subbotina

    One more positive aspect to be mentioned is that it is much more beneficial for investors eager to grow a large portfolio, as investing in single-family property takes more time and efforts. I mean, get a 15 unit apartment building would be faster and easier than acquiring 15 different single-family homes. As a result, your investment portfolio can be?ome larger, while the efforts made are much less.

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