Multifamily vs. Single-Family—What’s Your Take?

[Johnny Lynum]

If you had the chance to invest in your first property, would you choose a single-family home or a multifamily property? I’ve heard arguments for both, but I’m curious—what’s your preference, and why?

[JD Martin]

If I was starting from scratch, I would buy a duplex/triplex/quadplex, live in the crappiest unit and rent the others out. You're feeding 2 dogs with one biscuit by taking care of your living expenses and generating rental income at the same time, and by living in the house and keeping it to 4, you generally get exemptions on things that might bother you to live with (IE you can choose whomever you want as your tenants without running afoul of fair housing laws). You also get access to conventional financing. 

If I was not starting from scratch, like I did myself, I would buy SFHs because I prefer their long-term flexibility, relative scarcity, and multiple exit strategies to MFH. It's also easier to isolate and manage tenants, because they don't have any affect on each other as they do in MFH. There are more duplicity costs with SFH - more roofs, more yards, etc - but I have had and managed both and homes are better in my market.

[Shamar Gregg]

Quote from @Johnny Lynum:

If you had the chance to invest in your first property, would you choose a single-family home or a multifamily property? I’ve heard arguments for both, but I’m curious—what’s your preference, and why?

Personally, I started my investment journey with multifamily properties before moving into single-family homes. I recommend starting with multifamily if you're just getting started with limited capital. For example, I used an FHA loan (3.5% down) to purchase a 4-unit property, which allowed me to put down a low deposit while still generating strong cash flow from multiple rental units. Same can be done with VA loans and Conventional 5%.

Multifamily properties provide the advantage of multiple income streams, which can help offset vacancies and reduce risk. However, once I transitioned into single-family homes, I realized that the cash flow difference wasn’t as significant, but the management became simpler. With a single-family, you have one property, which means fewer moving parts.

If you have the funds to scale, I would recommend moving toward single-family homes, but if you're just starting out, multifamily can be a smarter choice. It’s the "bigger bird, smaller stone" approach: multifamily offers more immediate cash flow and flexibility when you're getting started, while single-family homes can provide more simplicity and scalability once you've built up some capital.

[Kailas Tare]

When deciding which market segment to target in real estate—whether it's multifamily (MF) properties or single-family homes (SFH)—it's crucial to consider the dynamics of the competitive landscape and your own financial position.

In general, multifamily properties are a popular choice for investors because they offer the potential for cash flow, scalability, and the ability to amortize debt across multiple units. However investors are often able to outbid others for multifamily properties due to their ability to make cash offers, which gives them a significant competitive advantage. Cash offers are often particularly appealing to sellers because they eliminate the uncertainties that come with financing, such as loan approval or appraisal issues. As a result, competing against seasoned investors in the multifamily space can be challenging, especially for newcomers or those with less capital to deploy.

On the other hand, single-family homes (SFH) are typically the go-to choice for primary homebuyers, who are not always as cash-rich as investors but can still secure financing through conventional loans. This is where the strategy of offering a higher down payment—like 25%—can make a big difference. A 25% down payment is not only attractive to sellers but can also help you stand out in a market where many buyers are putting down smaller amounts (e.g., 5% to 20%). Sellers often favor buyers who can make larger down payments, as it indicates stronger financial backing and reduces the risk of the deal falling through due to financing issues.

Additionally, SFH properties are more accessible to a wider range of buyers, including first-time homebuyers and families, which can lead to less direct competition from institutional investors. Unlike multifamily properties, SFHs are typically less appealing to large-scale investors who are focused on rental income and higher-density units. This means there may be less competition from professional investors, especially in areas where the demand for owner-occupied homes is strong.

In short, if you are just entering the real estate market and don’t yet have the capital to compete directly with investors for multifamily properties, focusing on single-family homes could be a more strategic choice. By offering a larger down payment, you can position yourself as a more attractive buyer and avoid some of the challenges associated with competing in the more investor-heavy multifamily market. Over time, as you gain more experience and capital, you can consider expanding into multifamily properties once you've built up a solid foundation in real estate investing.

[Samuel Diouf]

Hey Johnny,

Single-family homes and multifamily properties both have their pros and cons. Single-family homes benefit from a larger buyer pool, appealing to families and owner-occupants, which makes them easier to sell. They also tend to have lower tenant turnover and simpler management. However, vacancy means covering 100% of the expenses.

Multifamily properties almost always generate higher cash flow due to multiple income streams, which also reduces the risk of vacancies. They make it easier to scale your portfolio and build wealth. That said, the fewer units a property has, the easier it is to manage, so smaller multifamily properties can offer a good balance between cash flow and simplicity. Multifamily properties do require more management overall and typically appeal to a smaller, investor-focused buyer pool.

At my stage, I prefer small MFH over anything else because of the stronger cash flow, scalability, and the more forgiving capex compared to larger MFH, but the best option depends on your goals and strategy.

[Billy Smith]

I like SFH in the A-B area rent it you do the upkeep doing as much as possible your self to help max your rent out .I like to pay down the note as fast as possible .

If in a C-D area I would flip the SFH wash your hands of it.

SFH are generally easier to unload if you get in a cash crunch, I like staying in the first time home buyers level of a SFH keeping it in a hot zone .

If I were a BIG fish I would do deals at various level's of course after  doing the home work .

[Tanarat Bunchom]

Quote from @Johnny Lynum:

If you had the chance to invest in your first property, would you choose a single-family home or a multifamily property? I’ve heard arguments for both, but I’m curious—what’s your preference, and why?

It depends on your goals and situation. Single-family homes are simpler to manage and attract long-term tenants, making them great for beginners. Multifamily properties, however, can generate more cash flow and spread risk across multiple units, but they come with more management responsibility. If you’re open to living in one unit, a multifamily can also be a great house-hacking strategy to reduce living expenses while investing. Ultimately, it’s about what aligns with your budget, risk tolerance, and long-term plans.

[Johnny Lynum]

Quote from @JD Martin:

If I was starting from scratch, I would buy a duplex/triplex/quadplex, live in the crappiest unit and rent the others out. You're feeding 2 dogs with one biscuit by taking care of your living expenses and generating rental income at the same time, and by living in the house and keeping it to 4, you generally get exemptions on things that might bother you to live with (IE you can choose whomever you want as your tenants without running afoul of fair housing laws). You also get access to conventional financing. 

If I was not starting from scratch, like I did myself, I would buy SFHs because I prefer their long-term flexibility, relative scarcity, and multiple exit strategies to MFH. It's also easier to isolate and manage tenants, because they don't have any affect on each other as they do in MFH. There are more duplicity costs with SFH - more roofs, more yards, etc - but I have had and managed both and homes are better in my market.

Solid strategy! 💯 —house hacking for the win. 💪

I’m curious though—what’s been your biggest challenge managing tenants in multifamily vs. single-family properties? Any tips for someone weighing those options? Thanks!

[Johnny Lynum]

Quote from @Shamar Gregg:

Quote from @Johnny Lynum:

If you had the chance to invest in your first property, would you choose a single-family home or a multifamily property? I’ve heard arguments for both, but I’m curious—what’s your preference, and why?

Personally, I started my investment journey with multifamily properties before moving into single-family homes. I recommend starting with multifamily if you're just getting started with limited capital. For example, I used an FHA loan (3.5% down) to purchase a 4-unit property, which allowed me to put down a low deposit while still generating strong cash flow from multiple rental units. Same can be done with VA loans and Conventional 5%.

Multifamily properties provide the advantage of multiple income streams, which can help offset vacancies and reduce risk. However, once I transitioned into single-family homes, I realized that the cash flow difference wasn’t as significant, but the management became simpler. With a single-family, you have one property, which means fewer moving parts.

If you have the funds to scale, I would recommend moving toward single-family homes, but if you're just starting out, multifamily can be a smarter choice. It’s the "bigger bird, smaller stone" approach: multifamily offers more immediate cash flow and flexibility when you're getting started, while single-family homes can provide more simplicity and scalability once you've built up some capital.

Love this approach—starting with MF is solid, especially with the added cash flow from multiple units! Totally agree about the "bigger bird, smaller stone" analogy (can I borrow this?)

I went the VA loan route myself, and the ability to house hack while building wealth was a game changer. What was the most surprising thing you learned when transitioning?

[Johnny Lynum]

Quote from @Kailas Tare:

When deciding which market segment to target in real estate—whether it's multifamily (MF) properties or single-family homes (SFH)—it's crucial to consider the dynamics of the competitive landscape and your own financial position.

In general, multifamily properties are a popular choice for investors because they offer the potential for cash flow, scalability, and the ability to amortize debt across multiple units. However investors are often able to outbid others for multifamily properties due to their ability to make cash offers, which gives them a significant competitive advantage. Cash offers are often particularly appealing to sellers because they eliminate the uncertainties that come with financing, such as loan approval or appraisal issues. As a result, competing against seasoned investors in the multifamily space can be challenging, especially for newcomers or those with less capital to deploy.

On the other hand, single-family homes (SFH) are typically the go-to choice for primary homebuyers, who are not always as cash-rich as investors but can still secure financing through conventional loans. This is where the strategy of offering a higher down payment—like 25%—can make a big difference. A 25% down payment is not only attractive to sellers but can also help you stand out in a market where many buyers are putting down smaller amounts (e.g., 5% to 20%). Sellers often favor buyers who can make larger down payments, as it indicates stronger financial backing and reduces the risk of the deal falling through due to financing issues.

Additionally, SFH properties are more accessible to a wider range of buyers, including first-time homebuyers and families, which can lead to less direct competition from institutional investors. Unlike multifamily properties, SFHs are typically less appealing to large-scale investors who are focused on rental income and higher-density units. This means there may be less competition from professional investors, especially in areas where the demand for owner-occupied homes is strong.

In short, if you are just entering the real estate market and don’t yet have the capital to compete directly with investors for multifamily properties, focusing on single-family homes could be a more strategic choice. By offering a larger down payment, you can position yourself as a more attractive buyer and avoid some of the challenges associated with competing in the more investor-heavy multifamily market. Over time, as you gain more experience and capital, you can consider expanding into multifamily properties once you've built up a solid foundation in real estate investing.

Great breakdown! Thank you! This hits home, especially for anyone just starting out in real estate. As someone with a military background, I’ve always approached investing like a mission—know your strengths, assess the terrain, and execute strategically.

For me, starting with SFHs felt like the “crawl” phase before running into multifamily. It’s a solid way to build experience and confidence without diving straight into heavy competition with big players.

Question: What’s been your biggest challenge in deciding which market to focus on?

[Johnny Lynum]

Quote from @Samuel Diouf:

Hey Johnny,

Single-family homes and multifamily properties both have their pros and cons. Single-family homes benefit from a larger buyer pool, appealing to families and owner-occupants, which makes them easier to sell. They also tend to have lower tenant turnover and simpler management. However, vacancy means covering 100% of the expenses.

Multifamily properties almost always generate higher cash flow due to multiple income streams, which also reduces the risk of vacancies. They make it easier to scale your portfolio and build wealth. That said, the fewer units a property has, the easier it is to manage, so smaller multifamily properties can offer a good balance between cash flow and simplicity. Multifamily properties do require more management overall and typically appeal to a smaller, investor-focused buyer pool.

At my stage, I prefer small MFH over anything else because of the stronger cash flow, scalability, and the more forgiving capex compared to larger MFH, but the best option depends on your goals and strategy.

Great breakdown! 🙌 I’ve definitely seen the pros and cons play out in both single-family and multifamily properties in my own journey. Starting out, single-family was my go-to—easier to manage and a great intro to the game. But man, once I shifted to smaller multifamily properties, the cash flow and scalability made me wonder why I didn’t start sooner!

Quick question: What’s been your biggest challenge when managing smaller multifamily properties? Always curious to hear about different experiences!

[Johnny Lynum]

Quote from @Billy Smith:

I like SFH in the A-B area rent it you do the upkeep doing as much as possible your self to help max your rent out .I like to pay down the note as fast as possible .

If in a C-D area I would flip the SFH wash your hands of it.

SFH are generally easier to unload if you get in a cash crunch, I like staying in the first time home buyers level of a SFH keeping it in a hot zone .

If I were a BIG fish I would do deals at various level's of course after  doing the home work .

Ah!!! Solid strategy! Focusing on A-B areas and taking a hands-on approach definitely helps with maximizing cash flow and equity. Paying down the note quickly is a power move too—love that disciplined mindset! 💪

Flipping in C-D areas is smart for avoiding long-term headaches, especially when it's not worth the upkeep. First-time homebuyer-level SFHs are such a sweet spot for liquidity and demand, especially when the market gets tight.

Quick question—when you're doing the homework for a potential deal, what's your go-to checklist for deciding if it’s a flip or a hold? Would love to hear your process! Thank you! 

[Aristotle Kumpis]

Depends on what your goals are. 1-4 units are still residential, so it doesn't really matter how you start. But if your goal is to leave your day job soon, multi family will offer more cash flow typically. If your goal is to have a bunch of properties for retirement, then either one will work. 

[John Morgan]

I'm a fan of SFR. I have 29 of them and rarely have any turnovers which are a pain and eat up profits. These people seem to stay for years which makes it easy for me to self manage. With single family, you don't have any drama like MF. And SF is much easier to sell if necessary because you can sell to an investor or home owner. Appreciation is usually better over time with SF vs MF.

[Billy Smith]

Quote from @Johnny Lynum:

Quote from @Billy Smith:

I like SFH in the A-B area rent it you do the upkeep doing as much as possible your self to help max your rent out .I like to pay down the note as fast as possible .

If in a C-D area I would flip the SFH wash your hands of it.

SFH are generally easier to unload if you get in a cash crunch, I like staying in the first time home buyers level of a SFH keeping it in a hot zone .

If I were a BIG fish I would do deals at various level's of course after  doing the home work .

Ah!!! Solid strategy! Focusing on A-B areas and taking a hands-on approach definitely helps with maximizing cash flow and equity. Paying down the note quickly is a power move too—love that disciplined mindset! 💪

Flipping in C-D areas is smart for avoiding long-term headaches, especially when it's not worth the upkeep. First-time homebuyer-level SFHs are such a sweet spot for liquidity and demand, especially when the market gets tight.

Quick question—when you're doing the homework for a potential deal, what's your go-to checklist for deciding if it’s a flip or a hold? Would love to hear your process! Thank you! 

My logic behind a area to hold is basically is in my zone of knowledge that means close in and in a  A-B area .BIG fish can have the whole USA in their  zone .
Outside of my zone I am thinking flip it there are exceptions like all rules .