Pros & Cons: Single family & Multi family

[Matt Ferch]

Hi you guys, I am trying to organize thoughts around single family vs. multi family.  I’d like to be confident and knowledgeable enough to articulate the rationale for either niche. 

This is my work-in-progress list. There are some assumptions in here that vary, but I tried to capture what it might be ‘on average.’ I’d love to get your perspective and build on this. 

Single family

Pros

- available at every price point

- easy to understand

- comps are relatively easy to determine

- numerous exit strategies available

- less complex to rehab

- less complex to BRRRR

- better likelihood of natural appreciation

- Less turnover

- Fewer tenant headaches

- Tenants pick up most/all of property expenses (also, no common areas)

- Tenant more involved in upkeep

- More financing options

Cons

- a lot of competition (regular buyers, other investors)

- inherently slower to scale than multi family

Multi family

Pros

- scale up is built in

- more cash flow vs amount invested? compared to single family?

- More units over which to spread costs

- Bigger deals in which investors can be brought in

Cons

- fewer available exit strategies

- harder to rehab assuming occupancy

- less natural appreciation (investors always want a deal)

- owner more likely to pay some utilities

- higher percentage of vacancy / more turnover

- generally lower caliber of occupant than single family (more hassle)