Multifamily vs. Single-Family—What’s Your Take?

[Johnny Lynum]

If you had the chance to invest in your first property, would you choose a single-family home or a multifamily property? I’ve heard arguments for both, but I’m curious—what’s your preference, and why?

[JD Martin]

If I was starting from scratch, I would buy a duplex/triplex/quadplex, live in the crappiest unit and rent the others out. You're feeding 2 dogs with one biscuit by taking care of your living expenses and generating rental income at the same time, and by living in the house and keeping it to 4, you generally get exemptions on things that might bother you to live with (IE you can choose whomever you want as your tenants without running afoul of fair housing laws). You also get access to conventional financing. 

If I was not starting from scratch, like I did myself, I would buy SFHs because I prefer their long-term flexibility, relative scarcity, and multiple exit strategies to MFH. It's also easier to isolate and manage tenants, because they don't have any affect on each other as they do in MFH. There are more duplicity costs with SFH - more roofs, more yards, etc - but I have had and managed both and homes are better in my market.