What's better? Single family or multifamily for first investment?

Question

What's better? Buying a single family home first or buying a duplex? Can't decide which way to go. Either one would be our primary residence, so down payment and closing costs are fairly the same. We have found homes that have basements converted into apartments, which we could rent out for income and have also found duplexes with one unit occupied. We want to buy our primary residence and quickly after buy an investment property, which I know would be 20% down. I guess I'm asking does it really matter which one we start out with first or am I overthinking this process after intaking vast amounts of information. Any suggestions are appreciated. (FYI, looking in SC and OH, open to other places as well.)

Nathan Gesner · Answer

You can buy up to four units with just 5% down as long as you occupy one of the units. I think that's the best opportunity to get started.

Randa Dehaan · Answer

I would go the multi family route! If your goal is to have multiple investments, it’s the best way to acquire multiple doors at once — and helps you pay for your own mortgage! You can also utilize the 5% down program on 2-4 units multiple times so that’s another strategy that you can repeat.

Ameet Mehta · Answer

Deciding between a single-family vs multi-family investment is a common hurdle. So, let’s weigh the pros and cons, shall we?

Single-Family Home with a Basement:

Pros:

• Familiar single-family living with potential rental income.
• Can be a good starter home, quieter living if the basement is well-soundproofed.
• Potentially lower initial investment compared to a duplex (depending on renovations).

Cons:

• Finding tenants might take longer, especially if the basement isn't a fully formed apartment.
• You'll be responsible for all maintenance and repairs for both units.
• Less separation between your living space and the rental unit.

Multifamily Duplex:

Pros:

• Clear separation between your living space and the rental unit.
• Potentially higher rental income with a full, separate unit.
• Faster tenant search as it's a more traditional rental format.

Cons:

• Might be slightly more expensive upfront than a single-family home with a converted basement.
• Potential for noise complaints if the duplex isn't well-built.
• Dealing with potentially two sets of tenants (though vacancy rates are typically lower with duplexes).

So, which one to buy first? Try asking yourself these questions:

• Do you value more privacy and a traditional home feel (single-family), or are you comfortable with potentially closer proximity to tenants (duplex)?
• Is there a higher demand for single-family homes with basement apartments or duplexes in your area? Talk to a local realtor about rental trends.
• Consider the specific homes you've found. How much work needs to be done in the basement conversion? Is the duplex well-maintained and soundproofed?

Also, you’re not overthinking it, Dajana! Buying a property is a big decision, so taking in too much information just might be smart.

Bret M. · Answer

Look into a duplex, in my opinion. You can start cash flowing off the bat and (depending on the financials) can potentially help your DTI.

https://themortgagereports.com/107690/fannie-mae-introduces-...

What's better? Single family or multifamily for first investment?

What's better? Single family or multifamily for first investment?

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