multi- or single- family property?

Question

Which do you think is a better rental property investment: a multi-family or a single-family property?

I feel like each have their own pros and cons, and I would love to hear what you guys think are the pros and cons of each property type.

Bryan Noth · Answer

@Jonathan Feliciano I believe @Marlen Weber put it well, it is a tough call.  A great deal depends on your market but on the whole, small multifamily retains the capacity to be purchased with residential loan and has the economies of scale advantage.  Most often you can acquire units at a lower cost than you could with respective SFR unit acquisitions.  In a state with higher property tax this can be especially beneficial. Not to mention a duplex or quadplex with 1 roof has only one of that Capex item.

However, SFR value tends to be driven more on location and emotional appeal in general.  This can be a blessing or a curse depending on the hyperlocal region.  One last major advantage for SFR/SFH is that the unit can easily be sold to a home buyer and not just an investor.  Multifamily appeals primarily to investors.  The pool of homebuyers who are not necessarily investors is markedly larger.

Marlen Weber · Answer

It's a toughy for sure. I am interested to know as well. At the end of the day, you can't go wrong with a good investment property that has great numbers and is located in a good market. Looking forward to learn what others have to say.

Marlen Weber · Answer

Great information, @Bryan Noth. Thanks for going into detail and explaining it to us.

John Colburn · Answer

Both have their advantages.   The multi family will generate higher cash flow, and if one tenant moves out you still have cash flow from the other units.  You tend to have more problems with family's living right next to one another in apartment buildings

Most folks prefer to live in a single family property versus a multi family.  The single family houses are much easier to sell.  The value of a home may appreciate more.   The value of multi family is based on it cash flow.

multi- or single- family property?

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