Single Family, 2-4 Unit Multifamily, or 5+ Unit Multifamily? Explore the Benefits of Each Here!

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Multifamily or single family? Real estate investors have been debating these two strategies for a very long time. Our company has invested in single families, small multifamily (1-4 units), mid-sized commercial multifamily (5-40 units), and large apartment complexes (40+ units). There are benefits to all of these property types, and sharing our company’s experiences and outlooks on why we like each will help you weigh which type of property may fit your needs best.

As real estate continues to gain attention from more and more new investors, I thought an article giving some of the basic benefits of residential rental property types could help new investors find what property type will fit them best. In this article, I break down these types of property into single family, 2-4 unit multifamily, and 5+ unit multifamily.

We have a very unique perspective on this topic because not only have we bought all of these types of properties, but we currently still hold each of them in our portfolio. I think all real estate investment is a wise choice if well thought out. This is why rather than build a pros/cons list I will stick to the benefits of each property type and let you make the choice. I’d enjoy hearing your own experiences and opinions in the comments below!


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Single Family

Like many investors, we began our investing adventure with single families. It was safe, we understood houses, and so we felt secure spending all this money on a house. Owning an apartment at the time seemed scary and too big. As we learned the ropes of real estate investment, we noticed how great single families could be. Below are just a few of the many benefits.

Related: 7 Not-So-Amazing Aspects of Multifamily Investing (That Single Family Homes Avoid)

Multiple Exit Strategies/Liquidity

One benefit we like about single families houses is you can pivot very quickly. The numbers of buyers, sellers, and transactions in single families is far higher than either multifamily category. If you buy a property with the intention to rent but notice great appreciation in your market, you can put it up for sale and realize your gains in just a couple months. If you bought a property to sell but later are unable to, you just quickly throw it on Zillow and get it rented out. Because of the amount of transactions occurring on a daily basis with SFRs, it is far easier to pivot or get liquid faster than in multifamily.

Length of Residency

Residents stick around longer in single family homes than they do in multifamily. Many of us know how costly turnovers can get, so if you are turning over every three years rather than every two, it can make a big difference to your bottom line over the life of the investment.

Relatively Small Cash Outlay

Probably the biggest reason many of us begin in SFRs is the capital needed to buy is less. If you have never invested in real estate or you don’t have a massive trust fund, it can be really hard to find enough capital to put into the first property. Single families make it achievable to do on your own through their lower price point.


The beauty of a long-term fixed rate mortgage on a buy and hold is a beautiful thing. In general, financing terms are more appealing when dealing in single families. Two to four-unit multifamilies will be similar, but the number of transactions lenders do for SFRs has made this type of property one of the most appealing financing options for investors.


Multifamily: 2-4 Units

After buying SFRs, our company ventured into small multifamily properties. Who hasn’t heard the classic “you only have one roof to replace but 4 people paying rent”? As opportunities arose for us to venture into these 2-4 unit properties, we took the leap. After owning them for several years, here are some of the great traits we have discovered through our own experiences, as well as other investors’.

Reduced Overhead

In 2-4 unit buildings, you begin to get the benefits of reducing expenses by combining them to service multiple streams of income. This could be the roof, the siding, the driveway, or any other shared expense that in a single family would be absorbed by the single rent.


Financing for 2-4 unit investment properties can be extremely appealing because they fall under residential lending guidelines, just like a single family. These properties are even approved for FHA financing, with as little as 5% down is easily accessible.  

Reduced Vacancy Burden

If you lose a tenant in your 4-plex, you still have rent coming in form the other three units. This provides peace of mind and helps protect you from having to cover expenses during a vacancy.

Consolidation of Operations

It is nice to have multiple streams of income from each unit while only having to do things once from an operations perspective. You only have to pay one tax bill, you only have to drive to and check on one location, you have one call to get the grass cut, and you only have one bill to be processed for that service. I think you get the point — more income but similar responsibilities to the single family.


Related: How Big Should I Aim for My Very First Multifamily Purchase?

Multifamily: 5+ Units

After having success in single families and small multifamily, we began purchasing 5+ unit properties. Our current business model focuses on 60+ unit apartments, but the concepts in this article remain applicable, whether you’re looking at a building with 5 units or 5,000 units.

Control of the Property Value

Any multifamily property with 5 or more units will be considered commercial property, and as such, is valued based on the income it produces. This simple change from 1-4 unit buildings gives the investor the ability to raise the value of the property by increasing income or decreasing expenses. For an in-depth look at this point, I wrote a article titled “Why the Wealthy Invest in Multifamily & Commercial Real Estate,” which can be found here.

Economies of Scale

As you add units, you will begin to see discounts on your expenses. It’s very similar to the reduced overhead in the 2-4 units. As you continue to raise the number of units, you’ll be more and more able to reduce your cost per unit on all expenses. Think about it — if you go to your carpet cleaning company and say, “I have one room of carpet needing cleaning” or you say, “I have 100 rooms needing cleaning,” which will you be able to negotiate a better price on?

Efficient, Consistent, Easy to Navigate

The entire process of buying, managing, or selling a larger multifamily property is business/income focused. Most sellers do not get emotionally attached to their properties, buyers come to their offers based on financials, and both parties tend to be sophisticated investors. This makes the whole process efficient, consistent, and easy to navigate.

Simplified/Inexpensive Management

Whether you self manage or hire management, the large properties make it simpler to systematize and manage. Third party management for single family homes typically fall in the 8-10% range, while with large multifamily, it can be in the 4-8% range. The reason it cost less it because it’s easier.

There is no right or wrong type of property. It all depends on what your goals are. As many new investors begin to gain interest in rental property, I hope this will serve as a basic guide to help you make a choice to continue research into the type of property that fits you best.  

Which is YOUR favorite niche — and why?

Let’s talk in the comments section below!

About Author

Jered Sturm

Jered Sturm is co-founder and director of sales and marketing at SNS Capital Group. Jered began in the real estate industry in 2006, working for a successful real estate investment company as a handyman. From 2009-2012, Jered co-founded the construction company Sturm Properties. Using his background in contracting and construction, he began investing in “Value Add” real estate. Now, after co-founding SNS Capital Group, Jered has conducted over 10 million dollars in real estate transactions. He currently co-owns and operates a portfolio worth over 3.7 million dollars in investment real estate.


  1. Patsy Waldron

    Thanks for a simple but thorough break-down of each type of investment of residential property. So true that each presents distinct characteristics and advantages, and which type is a better fit for you depends on what your resources, skills and goals are.

  2. Matt Hoyt

    Personally I like all of them for different reasons. I think the natural way of things for most people is smaller then medium then larger. There is no correct answer but that generally makes sense for financing and learning as you go. Then when you have more dough and knowledge and need to scale you go bigger.


  3. Thanks Jered! I really do see the advantage of the larger multi-family units, especially when you find a property that has great income potential after reno. You just need to have the capital to get in on your first multi-family deal. Start small and scale bigger as you go 🙂

  4. Bradley Calvin

    Thank you for clearly and concisely outlying these benefits!

    Large multi’s seem to have the best economics and efficiencies due to the scale but tend to be hard to get into as a beginner with minimal capital. Im very happy with our first purchase of a 4-plex. We have the efficiencies of owning four units in one building while being able to secure a 5% down owner occupant loan. The added and perhaps most important bonus of this property and loan type is that your personal living expenses are reduced while living in one of the units while you learn the nuances of being a landlord.

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