Is there a case for single family over small multifamily for cash flow?

[R S]

The traditional view is that single family investing is a good place to start and potentially a good place to be if you're after appreciation rather than cash flow given the economy of scale in multifamily. I've been thinking about this a bit and I'm beginning to wonder if single family might actually be better for cash flow than small multifamily (<5 units) in certain markets and would love to hear what the experienced folks think.

In my market (South Florida), small multifamily isn't that common and is primarily found in C class neighborhoods. Aditionally, there are so many modern and amenitized apartment buildings with common areas, pools, gyms, etc., that I think it puts additional downward pressure on the small multifamily. 

There is appeal to living in your own single family home.

There is appeal to living in a larger, amenitized apartment building.

But as a renter, what's the appeal to living in a duplex or triplex unless it's right next to the beach or in some other unique location? 

This is completely location dependant. I invest out of state and in some markets, duplexes and triplexes are the norm and are scattered throughout every class of neighborhood. Large, amenitized apartment buildings are NOT as common, so you're not competing with them as a landlord.

Summing it all up, in a market like Florida, can single family actually be better than small multi for cash flow? Here is my thought process:

1. Less turnover. Single family homes are more likely to attract families who want more stability.

2. Better class of tenants (in some markets). Class B tenants can pick amenitized buildings, so why pick your duplex? 

3. Potentially faster to lease/less vacancy. Single family homes are more desirable and can be leased faster.

4. Lawncare and all utilities are on the tenant. In most small multis, the landlord pays for lawncare and often water if it's not separately metered. 

5. Downside: You end up with twenty roofs, twenty insurance bills, and twenty tax bills for twenty tenants. 

6. Downside: One vacancy puts you at 0% occupancy. However, this is negated with a large enough portfolio and you can really think of twenty homes as twenty units in a building from a vacancy standpoint. 

It seems to be working for the big guys like Invitation Homes. What are your thoughts? For what it's worth, my goal is to replace my W2 with real estate cash flow. 

[James Jones]

You're asking the right question because the "SFH vs small multi" debate really comes down to market structure and tenant behavior, not broad rules. In some markets, small multis dominate, and in others (like many parts of Florida) they're actually the inferior product in terms of demand and pricing power.

Here’s what I’ve seen from operating in multiple markets:

1. Tenant demand skews heavily toward SFH in family-oriented areas.

Families want privacy, a yard, their own driveway, and they tend to stay longer. That alone often offsets the theoretical “economies of scale” of a duplex or triplex.

2. Many small multis get squeezed from both sides.

In Class B areas, renters who want convenience choose the big amenity-rich apartments. In C areas, renters either want the cheapest option or a standalone small home. The duplex ends up stuck in the middle with no clear competitive advantage.

3. Vacancy risk is sometimes lower with SFH than multis.

A clean, safe SFH at a fair market rent usually rents faster than an older duplex with shared walls. People perceive more value in the single-family lifestyle.

4. Your point about utilities and lawncare is spot on.

When everything is tenant-paid, your operating expenses on SFH stay predictable. With small multis, one water bill spike or landscaping contract can crush your cash flow.

But, there are real tradeoffs:

• Yes, you take on more roofs and more insurance policies. No way around that.

• And one vacancy in a single home is 100 percent occupancy loss, unless you're operating at scale.

That's why a lot of operators either go all-in on SFH with systems or all-in on larger multis with scale. The small multi space in expensive markets can be a weird no-man's land.

Here’s the framework I use when choosing between the two:

If the SFH rents at a stronger price-to-cost ratio than a duplex, and leases faster with a stickier tenant base, SFH wins every time.

If the small multi gives you true economies of scale (shared utilities, lower taxes per door, strong rental demand), then the multi wins.

In many Florida submarkets, SFH simply has the advantage.

If your long-term goal is to replace your W2, the most important thing is buying into the product type that actually rents fast and stays full in your market. Cash flow is a function of stability as much as gross rent.