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Multi-family vs. Single-Family Homes

Troy Multifamily Housing Building in a Modern NeighborhoodFor today’s rental real estate investors, opportunity comes in a broad range of properties. If you’ve been discussing whether to invest in multi-family or single-family rental homes, it’s important to note that there are both pros and cons for both. In general, investing in rental real estate offers strong long-term profitability and relatively low risk. Most Troy rental real estate investors specialize in one specific property type for a reason.

It requires time and effort to acquire the expertise needed to determine when you’ve discovered an excellent property at the right price. However, if you need to decide or are trying to expand your real estate portfolio, then take a closer look at what both multi-family and single-family rentals have to bring to the table.

When determining a specific property type, there are a lot of factors that you’ll need to find out before even starting your property search. For instance, you should analyze whether you will be capable of organizing the financing you need, whether you possess the best investment team in place, and which property fits best with your specific business acumen and investing style.

Numerous investors start by investing in single-family homes for a reason. Although they may not actually be “easier” to buy, they may be less daunting for investors who are just starting. Arranging to finance a single-family residence is a reasonably simple procedure that most investors are already acquainted with. In addition, learning the ropes by managing just one property and one tenant can help new investors get informed without getting frustrated. There is a lot to learn about buying and managing rental real estate, regardless of what kind of property you pick.

Then again, investors can quickly understand real estate investing by buying a multi-family property as a single-family rental. There will be more research required, and financing can often be a problem. But with multiple tenants, you can expect multiple streams of income to cover the extra expenses. Although all multi-family properties can provide steady income and higher profits, the smaller multi-family properties, like duplexes or triplexes, can carry great potential for rental property investors seeking to expand out. Properties with four units or fewer can also be financed by conventional mortgages, making them more available in this manner.

A few investors decide to put resources in single-family properties over multi-family properties since they appear to have a more stable appreciation and fewer challenges. In an ordinary situation, both kinds of properties appreciate after a while. But calculating expected appreciation on a multi-family property can be a little more demanding compared to a single-family property.

This also applies to property management, together with leasing and tenant relations. The more tenants you have, the more time and effort it will take to communicate effectively with each one, conduct regular property evaluations, and complete regular property maintenance. If you employ a professional property manager, you will likely get a reduced rate for a multi-family property. But the dollar amount you need to spend would be higher because that percentage is usually based on the number of tenants you have, not your total rental income.

Lastly, it’s imperative to factor your exit strategy into your real estate investing decisions. When it comes time to sell your rental properties, single-family homes are less difficult to sell. The reason for this is that demand tends to be higher for single-family homes, and increased competition means a better sales price for you. By comparison, selling a multi-family property can take longer and be much harder to organize, simply because you are limited to investors looking for multi-family properties. Since they are investors, they will be much more willing to pass over your property if it isn’t priced low enough to make it worth their investment dollars.

Finally, the kind of property you select to invest in is at your discretion. But now that you have an excellent understanding of the pros and cons, you can determine what suits best your investing goals.

Now that you’ve invested, are you getting the most out of your location properties? Look no further than Real Property Management Silverstone! Contact us online or call 586-992-6419 and ask our Troy property managers about our FREE market analysis.

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