Why choose multi-family units than single-family homes for rental

[Johnny Youssef]

I own several single-family homes in Kansas City and they are all successfully rented out for a great return (about 14% average). I have been told by many successful investors that the next step I should look into is buying multi-family units. I am in a place where I am able to do that and I have been touring different properties (multi-families between 10-50 units) but I cannot wrap my mind around the return which seems to average around 7%. I understand that management is a lot easier for 20 units under one roof vs. 20 single homes but when the return is literally half, why should I consider multi-family? Would love to hear from anyone with experience on the two types of investments and if I am missing something.

[Damien C.]

I've never understood the argument that multi-families are better investments due to the vacancy issue. If a resident moves out of an SFR, it is true that that unit is 100% vacant. But your portfolio is not 100% vacant (unless you only have one rental house). If you own 20 SRFs or two 10-unit apartments, a resident moving out impacts your vacancy rate the same way, I would think.

I'm not against apartment investing at all. The vacancy issue seems irrelevant, though, unless I am misunderstanding the logic.