Multi family vs single family (pros and cons)

[Shannon M.]

My husband and I are entering the world of real estate investing and are in disagreement as whether or not to invest in a single family or multi family. Looking at cash flow figures single family seems low, much lower than multiple family properties. Logically it makes sense to invest in a multiple family property. My real estate agent, who also invests in rental properties advices against multi family properties because of the tenants who are drawn to them. In his opinion, there are a lot less headaches renting single family. I'd love to hear some opinions and insight from those who have experience with both types of investment properties.

[Greg Scott]

Sam:

Not sure what numbers you are seeing.  Generally my cash-on-cash returns are higher in single family....at least in the short term.   Multi family has a HUGE advantage in a few critical ways.  

1) You can deploy capital quickly.   So, putting $100K, $500K, $1M into a multi family property is much easier than putting the same into single family

2) Instead of waiting for appreciation because the market rises, you can force appreciation, giving you greater control over how fast you grow

3) Financing is easier.  After you grow the value of your property, do a 100% cash out refi and do it again.   Try that in single family!!!

Both strategies are actually just fine.  I wouldn't be where I am in multi-family without my prior single family investments.  It more depends on where you are financially and how comfortable you are with big numbers.

Feel free to private message me with any follow-on questions.