Rental Property Investor · Boonton Township, NJ · Member since 2017 · 10 posts · 4 votes
Hello!
I'm looking for my next rental in my market (northern NJ). I already have a 2-family home and would love another one. However, a single family (1 family) home fits my budget much more comfortably while a 2-family would be a stretch but still possible for me. There is also a larger inventory of 1- family homes in my area compared to 2-family.
I've never invested in a single-family home. What are some considerations for a 1-family home vs. 2- family? Would the tenant be responsible for more costs and maintenance in a single? 100% vacancy when a tenant moves out?
Also, rents in my area for a single family would have to be over $3k/month to make the deal work. I feel like this high of a rent would be harder to rent out compared to getting an apartment rented? Less of a tenant pool?
I’d compare the actual numbers on each property rather than assume a single family is easier to rent. If the single family has one tenant, a move out means the rent stops until it is re rented; with a two family, one unit can still produce rent while the other turns over. For the $3k target, I’d check recent leased comps for similar single family homes nearby and include vacancy, taxes, insurance, repairs and any owner paid utilities in the underwriting.
I’d compare the actual numbers on each property rather than assume a single family is easier to rent. If the single family has one tenant, a move out means the rent stops until it is re rented; with a two family, one unit can still produce rent while the other turns over. For the $3k target, I’d check recent leased comps for similar single family homes nearby and include vacancy, taxes, insurance, repairs and any owner paid utilities in the underwriting.
I tend to prefer single family due to ease of resale in the areas I invest in, less moving parts, less liability with one tenant vs multiples and likely better quality of neighborhood when looking at SFH vs multi.
Ekrem, I owned both single-family and small multifamily long-term rentals in Orlando before I moved into mid-term and short-term, so here's how your questions played out for me.
Costs and maintenance: Yes, a single-family tenant can carry more. In my single-family leases, the tenant paid all utilities and took care of the lawn and yard. Write both into the lease clearly: utilities in the tenant's name before move-in, and what "maintained" means for the yard. On a 2-family, shared items like common areas or a shared meter tend to land back on the owner.
Vacancy: It's 100% when the tenant leaves, no way around that. But in my experience the single-family vacancies weren't harder to absorb overall, because those tenants tended to stay longer, so I had fewer turnovers. I'd budget reserves for a full vacant month or two on the single-family instead of relying on a vacancy percentage.
The $3k tenant pool: Before you buy, check whether $3k actually fits the market. Pull rent comps in the immediate area, not just the town, and match them by property size: same bedroom and bath count and similar square footage. A tool like Rentometer is a quick way to see where $3k falls for that size home in that location. If $3k is in the normal range for comparable homes nearby, the tenant pool is there. If it's at the top of the range or above it, that's a sign to consider whether this is the right property for you right now.
I only buy single-family, so I will give you that side plainly. At 236 doors in Memphis, I buy single-family BRRRR houses under $100K, with an ARV of $180K-$265K, and I run the 1% rule first. One house, one tenant, one roof, and my in-house property management team knows the layout, the rehab, and the street. A 2/1 I can turn into a 3/1, or a 3/1 into a 4/2, changes the rent math, and for Section 8 I look at $1,395-$1,950 for 3-bed-plus houses. Your $3,000 rent is the real test in northern New Jersey. If that rent is at the top of the market for that size house, I would not buy it hoping a tenant appears. If the numbers clear the 1% rule and the rent is normal for the street, single-family is simple to own and simple to exit.
Ekrem, one more way to look at the single family, since $3k from one tenant is where it gets thin.
A 4 bedroom rented by the bedroom doesn't need one family who can pay $3k. It needs four people each paying for one room, and that pool is much bigger. It also fixes your 100% vacancy worry. When one person leaves you lose one room's rent, not the whole house.
The trade is that you pay the utilities and internet, furnish at least the shared spaces, and you turn rooms more often than you'd turn a whole house. So run it both ways with real room prices from Facebook Marketplace and Roommates.com for that town, not a guess.
Before any of that, call the town and ask how many unrelated people can live in one house. A lot of northern NJ towns are strict, and that answer decides whether this is even an option. If it's not allowed there, I'd lean toward stretching for the second 2 family, since you already know how to run one.