Multifamily Properties vs. Single Family Homes – Which is the Best Investment?
Learn Which Type of Housing Can Give You The Best Return on Your Investment
Deciding whether to invest in single family homes or a multifamily property is the cause of great debate for many real estate investors. There is no right or wrong answer – which you choose will depend on what type of investment property you want. Do you want big returns faster, or are you prepared to wait a little long to reap the benefits of your investment? Keep reading to learn which type of property might be right for you.
Single family homes are indisputably more affordable than multifamily properties – many investors are able to accumulate a portfolio of single family homes over time without having to look for any outside investment. However, while multifamily properties do require a lot more capital, the returns can be worth the larger investment.
As a general rule, the value of single family homes is determined by market conditions, not by the estimated rental income of the property. This means that the value of your portfolio is tied to the residential real estate market in general, be it good or bad. Multifamily properties, on the other hand, are normally valued as a multiple of the potential rental income. This means that the value of your multifamily property should not be adversely affected should the real estate market take a turn for the worse.
A professional property management company will usually charge around 10% of the collected rent to manage a single family rental. Because of this, many single family investors opt to take on the time-consuming task of managing their own rentals. The property management cost for apartment buildings, however, is usually built into the business model and usually works out around 4-7%. If you are in the market for a more passive investment, a multifamily property may be the way to go.
While they are highly desirable, it can take a lot of work to grow your portfolio of single family homes. Multifamily properties, on the other hand, allow you to grow your real estate portfolio much more quickly – you have the opportunity to acquire multiple properties within one building, rather than buying individual properties and slowly growing your business one purchase at a time.
If you decide that a multifamily property investment is right for you, the team at 100Units.com is here to help you. As your multifamily advisors, our goal is to provide you with the insight and help you need to secure the best multifamily investment property. From sourcing real estate investments and opportunities to protecting your financial interests during contract and closing, our team at 100Units.com will help you attain the best possible investment for your money. Get in touch today to find the perfect multifamily property.