If you have ever done research into the benefits of single family or multifamily rentals, you have seen differing opinions on which would ultimately be more profitable.
The decision to invest in real estate is one that demands insight. It is a major financial decision that should not be approached lightly because a bad investment strategy could end up costing you in the long run, which, depending on how bad the situation was, can sometimes be difficult to come back from.
So what are the pros and cons of each option? What information is imperative for certain investors to be aware of before they make the decision to invest?
Single Family Rentals
When it comes to investing in single family rentals, there is certain information that would prove advantageous for investors to know at the forefront:
Inventory. Single family rentals are much easier to come by than multifamily rentals. Every year, there are around 5 million home sales. If there are more options, it often means that investors are able to shop around for better deals.
Multiple exit options. Because single family rentals are more popular, they offer investors with a variety of exit strategies. Single family homes can be sold to first-time home buyers, other investors, or builders.
Lower cost to get started. For investors who have a more restricted budget, single family rentals are the cheaper option.
For investors who want a bit more than just acquiring a single property at a time, multifamily rentals could prove more cost-effective:
Scaling. Investors who wish to build their portfolios quickly and on a larger scale will reach their goals more quickly than those focusing on single family rentals.
More efficient. If you have more substantial goals to acquire as much property as possible, it will be more efficient that you do it with an apartment building rather than with single family homes. Think of all the time, money, and energy you will save working with multiple units at once.
More control. Hands-on investors will love the control that comes with multifamily rentals. They can adjust rents and control everything within the property – laundry, wifi, etc.
There is no inherent better option between the choice of a single family or multifamily home. Once you read through the pros of each option, it can help you make the choice that is right for you.