Single family house vs multi-units??

5 Replies

Hi everyone. From your experience, which one would you say is a better investment for my first purchase, a single family house or multi-unit building?

Also, is a house that are connected to other houses still considered a single family? I usually think of single family homes as the typical home you see with their own driveway, lawn, and backyard

Updated almost 3 years ago

This is for rental income

Hey Justin.  I only own Duplexes at this point.  I chose duplexes because I can pay retail prices (I didn't know any better at the time, my next one will be under retail) and still cash flow after all expenses.  My tenants pay less for rent than they would if the purchased their own house so its appealing to the Tennant.  Also, you have two income streams for one property with duplexes.  So, if one unit is vacant, you still have income that can cover most of the fixed costs while you fill the other side.  This has worked well for me.

Tennant's may take better care of a single family home because it doesn't "feel" ike a rental and they can be in non renter areas. 

Im not turned off to single family homes but the numbers seem a lot better the more units you can get onto one property.

Happy hunting!

Hi Justin. The question is a bit vague without a little more information. What are your investment goals. Are you flipping or holding for rental income? In that case I assume you mean which one yields better returns? Well how many units are we talking? In my market, both are great honestly. I care moreso about a good deal than multi-vs single.

Generally speaking you're going to have a better rental income from a multi than a SFR. It also helps with economies of scale in terms of management. Another nice thing is that 1-4 units are underwritten as residential loans. The downside to multis is that they don't generally appreciate at the same rate that SFRs do.

At the end of the day @William Stokes ' philosophy is a good one. Find the deals.

Originally posted by @Justin Lee :

Hi everyone. From your experience, which one would you say is a better investment for my first purchase, a single family house or multi-unit building?

Also, is a house that are connected to other houses still considered a single family? I usually think of single family homes as the typical home you see with their own driveway, lawn, and backyard

It depends on what the numbers suggest for the particular SFR or multi family you were looking at. If you were to invest a certain amount in either a SFR or multi family, each may have a different terminal value at the end of a target holding period of the investment. The net present value (NPV) may be a tool to utilize in ascertaining the route that makes the most $en$e.

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