Single vs Multi-Family Properties
In my 20+ year career, I must have been asked this question more times that I can count. People want to know. Which one is the better investment? Single or multi-family properties. For the first time ever, I’m going to breakdown the battle of who reigns supreme.
Tale of the Tape:
Single family properties
- Easier to find at good deals – since there are so much more of them out there, good deals aren’t too difficult to find for a savvy investor.
- Easier to sell a portion of your portfolio.
- Harder to sell your entire portfolio. The only people who will buy a bulk portfolio of single family homes want a steep discount. To get retail price, it’s going to take several years up sell a large portfolio.
- Easier to finance your first few
- Harder to finance a lot of them. Conventional lenders typically limit the amount of mortgages that one can have to around 5.
- Difficult to manage in scattered sites. If you are going to buy a bunch of single family homes, try to keep them close together.
- Easier to recover from bad management. If you screw something up, it only really affects one tenant.
Multi-family properties
- Harder to find at good deals
- Impossible to sell a portion of your portfolio (comparison: 40 single family homes vs a 40 unit building)
- Easier to sell your entire portfolio
- Not so easy to finance your first few
- Non-recourse financing available on bigger buildings
- Easier to manage
- Harder to recover from bad management. If you take your eye off the ball and let the multi-family property building get a bad reputation or get very bad tenants in, it could destroy the entire building and make recovery very difficult.
And the winner is… It depends on your investment strategy, access to cash and how long you plan to invest for.
To know what’s right for you, consult with a competent realtor experienced in different types of real estate investment.
Whether you own single of multi-family properties and you’re considering upgrading your property management, contact REMA today at AriMiller(at)reinfo411(dotted)com or 215.947.1032.