Is it better to invest in single family or multifamily rental properties? Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free There are passionate advocates for both of these types of properties. How do they really stack up? What are pros and cons of each option? Investing in Single Family Rental Properties Inventory Single family rental property investors enjoy much greater inventory choices. There are around 5 million home sales in an average year. More choices mean the potential for finding better deals and doing a higher volume of transactions. This may not feel like the case in some areas—for example, San Francisco—but if you open up your map, you can find plenty of options with less competition, more value, and more volume potential. Multiple Exit Strategies Single family homes are popular investments for the fact that they offer multiple exit strategies. They have much larger resale pools. There are far more end buyers for single family homes than apartment buildings. Individual homes can be sold to retail home buyers (first time home buyers, move up buyers, and those downsizing), rehabbers, other buy and hold investors, builders, to cash buyers, or on a seller financed basis. Related: Should You Invest in a Small or Mid-Sized Multifamily Deal? Get the Pros & Cons Here! Ease in Getting Started This is a cheaper option, too. The average single family home is far cheaper than an apartment building. That can be attractive to those that want to pay all cash. It can also appear easier for those that have little money to put down. If you don’t have the money to buy a whole house yourself, you can even partner with others. Investing in Multifamily Rental Properties Scale For those with really big goals, multifamily property investing can help make some big leaps. Imagine if each acquisition added 10, 20, or 100+ new units to your portfolio instead of just one. Anything over 5 units is consider commercial multifamily. One to four-unit properties are treated as residential for financing purposes. Efficiency It takes less time and energy to acquire 50 units in an apartment building than 50 single family homes. It may take a little longer and a little more work than one single family, but it does build in more efficiency and better ROI on your time. Investing is all about being efficient with your time and money. At some point, most investors will find that it only makes sense to graduate up to multifamily to fully optimize their cash, wealth building, and lives. ROI One of the best benefits of multifamily property investing is the economy of scale. That means you can do more for less. Apartment buildings typically have a lower cost per door, management is typically more effective and profitable, and any improvements made can help to lift the value of many units, not just one. For example, if you put in a pool, you are adding the value of a swimming pool to every unit in the community. Related: 4 Ways Technology is Shaking Up Commercial Real Estate (& Why Multifamily Will Pull Ahead) Control Multifamily property investors also enjoy more control over their income and asset values. Commercial properties like this are valued on their net income, not comparable sales. Landlords have the freedom to not only adjust rents, but to increase operational efficiency and augment income with factors such as laundry, internet service, and more. You can reposition an apartment building in many ways that are beyond the possibilities available to single family home investors. Summary Overall, I like both of these types of real estate investment because of the options above. I don’t think it has to be an either/or choice. Single family homes and apartments have their advantages. It really just comes down to what makes sense to you as an investor. Investors: What’s your preference, single or multifamily? Why? Leave your comments below!