Single family homes or multifamily homes?

Question

I should reach my financial goal close to the end of this year. 35k. I'm looking to invest in one of the two options above. Can anyone give some insight on their experience and maybe what was more lucrative for you? Thank you!

Drew Sygit · Answer

MF will allow you to scale faster

Dan Fowers · Answer

Multifamily is a drug, once you get a taste of it you cant go back... that being said go all in on multifamily, preferably 4 units but 2 will do.

Kainoa Oneha · Answer

I agree with @Dell J.

Multi-family properties if you want that lucrative route. Live in one unit and rent out the others. IMO, you could possibly get an FHA loan to purchase the multi-family property, which will require a smaller down payment, but you'll have to pay mortgage premiums. However, when trying to get the mortgage, you could use future/expected rental income to help offset the monthly mortgage payments. I'm not sure if first time homebuyer programs would be able to help with this, but you could try, just to have the deal benefit you more.

Overtime, as appreciation increases and the mortgage balance decreases, when you reach 20% equity in the property, you could refinance the loan to a conventional loan to get rid of the mortgage premiums.

It'll be much more lucrative if you manage the other units yourself, but your attention will be needed more. If you decide to get a property manager, you can be free of those late-night emergency calls, but you'll just have to include the property management fees with the other expenses.

Or go the SFR route. Find a flippable property, give it some sweat equity, live in it for a few years, then sell it and use the profit for a bigger home. Then work your way up. For instance, buy a condo, sell the condo, buy a townhome, sell the townhome, then buy an SFR. Benefits here are just appreciation and equity.

Hope this helps!

Randy Gutierrez · Answer

I have both, % wise I'm probably getting 1-2 points more CoC with SFH. Expenses like lawn care/snow removal you can pass on much easier to the tenants. When it comes to repairs and maintenance you don't have to worry about coordinating with multiple tenants in the event certain utilities are not split. You also don't have to worry about common areas and any maintenance associated with them.

On multi-families you tend to have better appreciation. Having multiple tenants under 1 roof is kind of a double edge sword.

Ultimately I would buy either as long as the numbers work out, they both have their pros and cons.

Angelo Medina · Answer

@Dell J.

Yeah. I'm considering the house-hacking method might be a good first step.

Dell J. · Answer

Let the numbers of the deal lead you.  i would say go after multifamily. It is the same amount of work, might as well go bigger