Does multi-family/apartment home appreciate as fast as single family homes?

Question

Hi BP,

New member here trying to gain some knowledge.

Assuming in a fast growing city like Phenix, AZ what is the pro/cons for picking few single family homes for long term rental/cash flow comparing of buying a multifamily/apartment home.

Mike D'Arrigo · Answer

@Leo Day It depends. Commercial property values are based on rent and operating income.

Eliott Elias · Answer

Single family appreciates based off comparables. Multi family appreciates based on value add. Two different strategies.

Jeremy Holden · Answer

The factors range from location, property condition, and access to amenities... For the most part in Phoenix, the affordable multifamily will not cash flow unless you are getting amazing seller financing terms or getting creative on rental strategy. Prices and rates have gone up so much that in the current environment, an LTR won't cash flow.

Your best bet is for SFH and Airbnb. This is what I do personally, im sure other folks have differing opinions.

Carlos Serrano · Answer

Single-family homes are easier to manage and have the potential to appreciate in value over time. Plus, they're popular among families, which can lead to longer tenancies. However, you'll only have one rental income source, which may limit your earning potential.

On the other hand, multifamily/apartment buildings provide multiple rental income sources, which can increase your earning potential and help you weather vacancies. But, they're more complex to manage, come with higher operating costs, and may have more regulatory requirements.

Ultimately, it depends on your goals and investment strategy. If you're looking for lower operating costs and simpler management, single-family homes may be a better fit. If you're looking for more rental income sources and stable cash flow, a multifamily/apartment building may be a better fit.