Single Family Homes vs Multi-Family Homes?

Question

Was wondering what you guys' thoughts were on SFH or MFH.

which do you prefer?

which comes with more or less head aches?

which is more sustainable?

which pushes you more toward financial freedom?

Thomas S. · Answer

SFHs have lower cash flow, higher expenses per tenant, 100% loss of income with vacancies, high cost per door due to market driven by home buyers. They are difficult to sell with a tenant in them meaning lost income during time it takes to sell. High risk.

Multi units are purpose built rental properties and will have higher cash flow per door. Market down turn has les effect on multi units. Value is based on income not whim of home buyers. Lower cost to aquire per door. Low risk.

Multi units are ideal for investors, SFHs are ideal for home buyers.

John Boychuk · Answer

I don't think small multifamily (2-4 units) comes with many more headaches than SFH. You are going to have more turnover, and if you don't put the right people in, you may have neighbor disputes, but IMO in the big picture it is the same.

Once you are doing 5+ unit buildings, that is when the dynamics change, and you have a lot more going on. I prefer MFH, there is more cashflow and I'm able to grow faster than if I were buying SFH, just by my strategy.

Rhonda Blue · Answer

@Riley Walz

If I knew then what I know now!!

I would start with short term rental. Maybe.

Sf definitely easy to find but in the long run unless your in a generous market could just slowly eat your profits.

Scott P. · Answer

I agree with @Thomas S. but I would add the SFR is easier to sell if you just want to "get out" of landlording - although I've had no problem selling small Multi either.

On balance, for a variety of reasons, I prefer 2 bedroom ranch duplexes aka "patio homes" but often times we in this business can't wave a magic wand and find exactly what we're looking for unless we develop the land.

Patrick M. · Answer

100% what @Thomas S. said.

I LOVE being an uninhibited landlord... a landlord who simply shrugs when a tenant gives notice of non-renewal, can post a notice to cease or quit at the hint of trouble... knowing that I am profitable at 50% occupancy

Alex S. · Answer

I would start with a single family first.

Melissa Nash · Answer

@Riley Walz. Sf is cheaper. Easier to acquire, better exit strategy and Lower down.

Usually higher returns with longer tenants.

Jason Bergan · Answer

Look at your specific market and target areas to see what your potential tenants are going to want. You can use the demographic data to see which will be more in demand. If you're looking for cash flow, multifamily is the way to go. Multifamily also is easier to self manage if that's what you're looking for, since more units will be in the same place, one driveway, one roof, etc. If you want to start with single family, vacancy is your biggest risk, so you likely are going to want to grow that more quickly to minimize your risk of vacancy.

Scott Bossman · Answer

Multi-family wins amongst my REI friends (vs. SF).

Myself ... I'm a land investor.

VERY low barrier for entry, and you can make profit quickly with land.  The  market is massive, and I have no tenants, termites, or toilets to deal with.

If you are interested, I can tell you more.

Andrea Maddison · Answer

@ Riley Walz I think it definitely depends on the area. My husband & I recently closed on our first investment property, a legal 2 family in NY. When we first started out looking single and multi-families didn't have that much different price and tax wise. Also I think it will be rare that we would have 2 vacancies at one pretty much guaranteeing that we would always have some kind of cash flow. I honestly think multifamily would be the better choice.

Single Family Homes vs Multi-Family Homes?

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