Multifamily or Single-Family Properties – Which is a Better Investment?

Should you invest in multifamily or single-family properties? This is a question real estate investors frequently contemplate and can be answered differently depending on specific circumstances.

So in this article, we review a few important things to consider when deciding whether to invest in multifamily or single-family properties, and we share an important video near the end of the article.

Difference Between Multifamily and Single-Family Properties

To give you a better idea of what we’re talking about, let’s discuss the major difference between single-family and multifamily properties.

For the sake of this article, a multifamily property contains multiple separate housing units within one building, such as a duplex, quadplex, townhouse, or apartment building. A single-family property is a structure maintained and used as a single dwelling unit in which only one family lives.

Why Invest in Single-Family Investment Properties?

We highly recommend that new property investors begin with a single-family property because this allows them to gain experience without risking a great deal of capital.

Many investors believe they should start their investing career with multifamily properties because there is less perceived risk and more income. Our experience, though, is that these investors will make mistakes, because they are at the bottom of the learning curve, and should start with a less expensive single-family investment property.

Real estate investors should understand that multifamily investment properties can increase their risk because multiple families are living under one roof. One bad tenant, or a group of bad tenants, can cause extensive damage, which can financially set an investor back for years. So, we council new investors to start by investing in single-family properties, and learn how to deal with tenants and property managers before investing in multifamily properties.

Besides risks related to tenants, real estate investors must also deal with risks related to property maintenance. Single-family properties have fewer maintenance issues, for obvious reasons, than a property with 100 families. Again, we council new investors to gain experience managing properties and working with property managers, before purchasing multifamily properties that can spiral out of control very quickly.

Finally, multifamily properties have more headaches than single-family properties, because of the number of tenants and the property size. Investors who learn to deal with these headaches on a smaller scale with single-family properties, before taking on the responsibility of multifamily properties, are often more successful.

Our Suggestion

As we discussed above, we suggest that new real estate investors start with single-family properties.

Specifically, we suggest that new investors start with single-family properties with a mid-range price, so they limit their risk while learning the ins and outs of real estate investing.

Furthermore, we suggest that real estate investors use a property management company, which typically results in less risk and increased profits because of professional management.

Once investors have experience with a few single-family properties, and feel like they are ready to advance their knowledge and assume more risk, we suggest they move into multifamily properties. However, we suggest investors stay away from smaller multifamily properties and purchase properties with 100 or more units – larger multifamily properties make it easier and more affordable to hire a property management company, and it’s more cost efficient to manage units that are centrally located.

Graystone Investment Group

Graystone Investment Group is an experienced Investment Group wholesaling single-family and multifamily investment properties in metro Tampa Bay. We serve clients who flip homes in as little as 30 days, as well as clients who own high cash flowing rental properties.

Unlike other wholesaling groups, we provide clients with a turnkey process at no extra charge. We find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years.

To learn more about profitable real estate investments in the Tampa Bay area, fill out our Investor Profile or contact us direct.