5 Reasons Single Family Homes Beat Multifamily Properties, Hands Down


A constant debate that I see here on the BiggerPockets Forums is whether a new investor should buy a single family home or a multifamily home as an investment. I can unequivocally say that from my experience, single family homes perform much better than small multifamily, especially for a new investor. There are 5 reasons why I think this.

How to Invest in Real Estate While Working a Full-Time Job

Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.

Click Here For Your Free eBook!

5 Reasons Single Family Homes Beat Multifamily Properties, Hands Down

Reason #1: Expenses

Contrary to conventional beliefs, across our whole portfolio, single family homes have lower expenses per unit than multifamily. There are a lot of expenses that we do not have on single family homes that we have on multifamily homes.

  • Single family homes have no common space to clean. They have no common utilities.
  • Tenants take care of landscaping and snow removal on single family homes.
  • Pest control is the responsibility of the tenant in a single family home.

All these added expenses make a big difference when we compare the two.


Related: Single Family vs. Multifamily: Which is the Better Investment?

Reason #2: Vacancy

Our experience has been that tenants stay longer in single family homes than they do in multifamily. Single family homes also rent more quickly than multifamily. This means:

  • Fewer repairs after someone moves out.
  • Fewer leasing fees.
  • Fewer days actually sitting vacant.

Once a tenant is in the house, they make it like their home, and they aren’t going to leave it to move into an apartment. But a tenant in an apartment is always willing to move out to get into a single family home.

Reason #3: Tenant Interaction

This may not seem like a big deal, but it can be. In a single family home, you don’t have to worry about the tenants getting along. We had a 3-unit property just a few months ago where the tenants hated each other. Over the course of 3 months, they called the cops on each other over 20 times. The police contacted us and said that one of the tenants needed to move or the police were going to start fining us for every time they came out.

Reason #4: Pride of Ownership

Our tenants love the fact that they have a home. It may not be theirs, but they treat it as their own. They keep it clean. They care for the yard. They love their home. It is quite possible that this is the nicest home they have ever lived in, and they treat it that way. Of course, we have some who don’t, but by far and large the people that treat the property poorly live in a multifamily.


Related: 6 Reasons to LOVE Multifamily Investments Over Single Family Homes

Reason #5: Sale of the Property

The best thing about a single family home is that it appeals to the largest amount of buyers. Apart from retail home buyers, investors would be interested in the property as well. You can sell the property for a much higher price than what the cash flows might predict to the interested retail home buyers. With retail buyers, there is an emotional component to their purchase. With multifamilies, it is more difficult to find someone who wants to live with their tenants. So, the pool of buyers is drastically reduced on the retail side.

On a pure number basis, I have found that single family homes outperform multifamily properties. So as a new investor, you’ll have fewer headaches with a single family home and more profit.

Where do you like to invest: single family or multifamily–and why?

Let me know with a comment!

About Author

Mark Ainley

Mark Ainley is founder of GC Realty and Development and GC Realty Investments. Mark has been an active real estate investor since 2003. He started slowly by flipping condos and acquiring a couple of investment properties. Since 2003, Mark and his team have successfully renovated and stabilized over 200 properties.


  1. Jim Carson

    Another issue I found with MultiFamily is parking. No matter how many parking spaces you have, and even if they are assigned, guests and friends will always park in them regardless. I can’t count how many times I’ve received a phone call that someone has parked in their spot. And people can’t read the signs “This parking spot is assigned to…”. Tenants get really upset when someone parks in “their spot”.

    Finding tenants that get along well is the biggest obstacle as well. On the other hand, I’ve even had some get along so well they decided to move in together, leaving their “significant other” in the process. It’s crazy. Happened a few times over the years. Then things get really crazy at the property.

  2. Mike McKinzie

    Overall, I agree 100% with your blog. Peter mentions the UK but then you have to get into cultural differences, which is not comparable in the United States. As a side note, many STATES in the US are larger than than the entire country of the UK, so SFR are much more common when you have more land. Jim Carson mentioned parking. I had one tenants car catch fire on an 8-plex I was managing and all eight tenants lost their parking garage! Of course you can get greater MONTHLY returns in Multi Family but the appreciation of a SFR will most times out weigh the lower monthly Cap Rate. Another issue is “On Site Management” which can be very difficult to find. In my experience, sometimes an on-site manager will side with a tenant over the owner, and cause more head aches. For me, SFR is just a much more comfortable investment.

  3. I think at all depends on the quality of the property and how rigorous your tenant screening and enforcing of the lease for multi. Almost everything you mentioned the Pro can be attributed to multi as well IF you pick the right property and tenants..
    But for cash flow, multi wins almost everytime..

  4. Susan Maneck

    If we think back to the times when we’ve lived in apartments we can see the problems with MF units. I lived in them only when I couldn’t afford anything else. It was a place to stay to until I was in the position to do something else. Now, there are places in the country like New York or San Francisco where apartment living would be the norm, but here in Mississippi it is what you do when you can’t do anything else. All my tenants know that whenever they are financially ready they can buy the house they live in. I keep my properties up so they would *want* to buy it. In my experience, if you don’t act like a slum lord they will show respect for your property as well.

  5. James Slaughter

    Great article Mark. I have been directing most of my energy at multifamilies, but recently began thinking that at least in my “backyard” SFH’s outnumber multifamily homes 1,000 to 1. I believe the chance of finding a “deal” in my market is vastly easier in the SFH market based on the numbers alone. Your article only helped point out some of the other factors that I was not considering. Still have to consider how important economy of scale arguments (although you addressed that) and scalability are. Thanks!

    • Mark Ainley

      I agree on the scalability but when it gets to a larger complex which is in our sight but In Chicagoland the 75-150 unit complexes are not available to often so it means multi family is 6-18 units and I would rather knock out 18 SFH vs an 18 unit in our market.

  6. Depends on where you are. Here in California the SFs are priced too high. MF are a much better deal. I’ve rented and seen SF homes where the floor had to be replaced as it was completely rotted out from plumbing leaks, and holes in the walls in others. In a MF the other tenants would alert you to impending problems. It all just depends.

  7. David Hodge

    Thanks for the insight! My wife and I our buying our first few SFRs right now. We have thought about potentially getting into multi family in the future because we assumed they’d produce better returns but maybe that’s not necessarily the case!

  8. Jim Brozny

    Very helpful article, Mark. Now that I’ve owned properties for several years, I tend to agree with you. However, I wouldn’t trade my first experience as an investor and Landlord. My first investment property was also my home. As a new investor/live-in landlord, I had no choice but to learn the business of property management very quickly. It’s a lot easier to run up the stairs to solve a problem than it is drive across town. Also, the rental income covered my personal housing expense.

  9. Michael Swan

    Hi Jim and all,

    This is a very interesting debate. I have lately been 1031 exchanging all my single family condos in San Diego for Multifamily in another state. I went very quickly from 10 front doors to currently 46 front doors. I still have 5 single family condos in San Diego and 9 single family in another state. Also, in this other state I have an 8 unit, 10 unit, and a 15 unit out of state. In my situation, I had at the beginning of 2015 I had accumulated approximately 1.6 million in equity on these single family condos in San Diego. I purchased these properties in 2011, 2012′ and 2013. So, in a very short period of time they had appreciated wildly. After much research an education, I realized that my ROE (Return On Equity) was a measly 3%. Also, I have lived in San Diego a long time and realized that they are beginning to give loans to people that can’t even do a household budget and should clearly NOT own a home. At the same time I was buying up cheap, high cash flowing (2.25%) rule single family in another state using cash. I quickly realized my cash reserves were going to run out.

    Here is the magic of Multifamily and good leveraged debt in the Multifamily arena. I read and researched and found out I could trade $5,000.00 cash flow into anywhere from $15,000.00 low to $25,000.00 high for tax deferred cash flow by 1031 each pricey San Diego Condo in for these small Multifamily that was explained to be in this article as a much inferior investment.

    Then, I also discovered, through mounds of research, that Multifamily lending is based on NOI, not comps. That is huge!! What happens when the comps on single family go down? Multifamily is amazing in the fact that I can simply raise rents by $50.00 a unit and contract with landscapers, trash, pest control, snow plow and ? on the open market and lower my costs. Plus I can add services that bring in more money (coin operated laundry etc..). On example of this amazing valuation is that we expect in the next 12 to 18 months to increase our NOI by $15,000 minimum on a complex I purchased this past August. The bank lender says , if I can do this, the property will be worth $150,000.00 more than I paid for it. This has nothing to do with comps. If I increase the NOI by $1.00, the lenders vaue that dollar at $10.00 upon sale.

    Thus, my property manager, with my guidance will earn his 5% fee and I manage the process from sunny San Diego. Of course, with this increased NOI, my cash flow goes up to my goal of at least $25,000 for each complex. We only originally invested approximately $30,000.00 for each Condo in San Diego.

    I now follow three rules. 1. It can’t lose money 2. It must cash flow 3. You can’t get rich slow. Why not just start with Multifamily and increase NOI every 2 or 3 years and 1031 exchange over and over again, until you have 2 or 3 large 200-300 unit complexes and make approximately $1,000,000.00 in cash flow per year?

    Just cash in your IRA for every down payment on an apartment complex and pay the taxes. You have to pay them anyway when you start to withdraw later in life at some imaginary age. Also, pay the stupid penalty (10%) for investing your hard earned money and making others rich and go right to apartment complexes.

    I did that originally when investing in the single family condos in San Diego. My returns are over 500% return in less than 5 years. I sure am glad I cashed in my IRA’s and paid the taxes and stupid penalty. Think about the logic. Your IRA is invested in small cap, large cap, mid cap, international etc. I call that deworsificstion. There was a ten year period that I invested $6,000.00 a year and my balance was the same as I started 10 years previously. Imagine if I was at retirement age. What a joke!! Get that money in your hands and put all your hard earned money in tax deferred passive real estate and get the benefits now!! Not some imaginary date in the future.

    That’s what I did and now have 4 million in total real estate and 2 million in net worth. To me, Multifamily is my path to financial freedom. Single family is doable, but a much slower path to financial freedom. I expect to surpass my w2 earnings by March or April of 2016. That is only 5 short years after my first little condo earning $4,000 a year in passive cash flow. We only invested about $30,000.00 on that first condo.


    • Jeremy Lea

      Hi Swanny,

      I appreciate you providing your strategy in such detail. I would not expect you to share which state you chose to invest in multi family, but would you mind explaining the criteria you set for yourself in deciding which state was best for you to invest in?

      Thank you, Jeremy

  10. Karl B.

    One could argue an investor looking to ‘house hack’ who also enjoys his/her privacy could buy a multi-family, live in a unit and rent the other unit(s).

    When I bought my single-family in L.A. I rented a room and that experience stunk (the guy failed to tell me he worked until 5 AM every day and he kept waking me up – plus he was loud and messy). Had I bought a multi-family (I was considering a 4-unit but it was super close to the freeway) the guy could have rented his own unit.

    I know this article is about renting the entire single-family out but I figured here’s an instance where a multi-family would be better for someone like me (when house hacking).

  11. Ken A.

    Everyone will be shocked at the much higher prices for Single Family Homes by 2022-2024. Gains will be higher in the better areas. What can actually drag the “gains” are the stagnant areas that will never go up. Don’t invest there. The Biggest points for MUCH higher prices (been saying this since 2011-2012) are

    1. Too much demand chasing too little “retail” ready supply (Hello Economics 101).

    2. Interest rates around 4%. Are you kidding me – Have you looked at the last 50-60 years-that is way too low and makes it much more affordable.

    3. GREED – This will push Better Real Estate much higher – IT NEVER FAILS. There is way way way too much CASH on the sidelines – THEY ALWAYS chase higher yields.

    I don’t know what #3 above will exactly look like. It could be Crazy Investor Loans – giving loans on investment Real Estate packaged by Wall Street (think about the Stupid Loans they gave to Home Owners – So why not Stupid Loans to Investors eventually – just a thought.

    Watch how the FED always mentions Housing Prices, etc. The Gov’t will probably want to find a way to get banks, etc. to make loans. The Government actually LOVES INFLATION. Don’t be fooled. They (gov’t) can then pay off their debt with cheaper money.

    I’ll be selling pretty much everything in 2022-2024 as GREED BUBBLE inflates.

    I’m still buying $30K homes with $700-$800 rents. That’s my niche. These homes used to sell for $100K+ during bubble. History may not repeat, but it will probably Rhyme.

    Added Note:

    What brings new home buyers into the market? What makes them finally pull the trigger and buy?

    For the typical home buyer, housing value has little to do with actual home prices. And it has everything to do with monthly payments.

    Two things have happened… 1) we saw the worst bust in house prices in generations and we still haven’t fully recovered and 2) mortgage rates are near all-time lows, below 4%.

    I don’t think people really understand how incredible current mortgage rates are. The chart below shows mortgage rates since 1900. As you can see, today’s sub-4% levels are unprecedented…

    With mortgage rates this low, housing is now more affordable than ever. It combines home prices, mortgage rates, and incomes.)And that means home prices could still move significantly higher.

    How much could home prices move?

    Based on normal housing affordability, fair value for U.S. housing is around $261,500. So right now, median home prices are well below fair value. Take a look…

    The gap between housing prices and fair value has been closing since 2012, when home prices began to move higher. But housing is still $53,500 below historical fair value. There’s plenty of upside in U.S. housing!

    I’ve been writing this for years, but the story is still true today. It’s still one of the best times in American history to buy a home.

  12. Al Hartwig

    I agree with the author of the article. Trouble with tenants is much reduced with a single family. I have had tenants that have actually improved the property & not asked any in return. No large repair. Things like painting, cleaning & some landscaping, thing like that.
    In the duplex one tenant called complaining that her mother stepped in some dog droppings. I told her that she would have to install a chain link fence so that her mother would have a safe place to walk. There are noise complaints also.
    In a single family no such issues.

  13. Donal Murphy

    A lot of this seems anecdotal. Do you have numbers to back up some of these points? My folks have owned and managed multi-family rentals for over 30 years and have done really well. Not that they haven’t run into some of the issues you described, but a lot of your negatives can be addressed by tenant screening and pre-arraigned agreements, or can simply be a product of a specific market.

    I’ve also had friends and family that have owned and rented single family homes that have gone through the problems you have listed.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here