Are you entering the field of real estate investments and property rentals? Then one of the first choices you might have to make is whether to invest in and take charge of single or multifamily rental properties. Investing in and renting out these properties have their own specific benefits when it comes to certain factors, such as income, management style, and others. These benefits can help you depending on your own specific goals and needs. Learn about the advantages each option has in order to make the right choice for you.
Advantages of Single-Family Properties
A single-family property is usually designed so a single owner and his or her respective family can occupy it. As a result, it is usually a single, free-standing unit with no other living units attached to it, and usually includes a yard and a garage. Most of the time, it is a traditional residence. These rentals have some of their advantages over multifamily buildings.
Affordability: Single-family units are easier to finance than multifamily ones, particularly for first-time investors. Real estate prices are generally lower, as well as insurance rates. Mortgage lenders provide more financing opportunities, and you may even have to pay only 10-15% for the down payment.
Easier to Manage: Management and the costs associated with it are easier to handle in a single unit. There is less property to cover, so you can either handle management yourself or hire a property manager. You can also have the tenant to take care of most maintenance, which reduces the costs and responsibilities.
Resale Opportunity. Single-family units are easier to sell due to the lower expenses and barrier to entry. You also have a greater client pool between other investors and traditional homeowners.
Advantages of Multifamily Properties
Multifamily rental properties are complexes that have two or more living units under a single roof. These properties include duplexes, condos, and townhouses. While there are more units to manage, there are also some exclusive advantages to these properties.
Greater Income: Having multiple tenants in a single property building means you have a larger source of income for a single investment. This income will make it easier to afford for maintenance and keep the additional profit. Also, living in a multifamily property can also increase your passive income.
Lesser Vacancy Impact: If your single-family property is vacant, you will immediately lose that income source. However, a vacancy in a multifamily property means that you only lose a fraction of that income. You will still have a consistent cash flow while you wait for a new tenant.
Faster Scalability: If you desire to grow your real estate portfolio more efficiently, then multifamily properties are the solution. Instead of investing in several, separate units, you can save time and expense by obtaining multiple units with a single investment.
Whether you choose to invest in a single or a small multifamily rental property, there are always property management systems such as Home365 that can help you manage every aspect and task. Visit Home365 today to learn more about the services we can provide you and get a free quote!