Posted almost 8 years ago

Single Family vs. Multi-Family Investments

As you start your property investing journey, you've perhaps come across a major stumbling block on the single family vs. multi-family argument. You'll find many property investors who probably recommend you invest in either or both. Before you do, you have to look at the realities of both since going into property investing without major homework is like going into a storm blind.

On a general level, it all depends on what kind of cash flow you need. It also comes down to how fast you want your investments to scale.

Even more so, a buying decision has to go on how much you're willing to spend. As with all property investments, deciding how much capital you're willing to put in matters in future success.

Regardless, investing in single-family homes and multi-family apartments makes for exciting investing opportunities. It does require astute strategy, especially for single-family properties. In this regard, it may require more patience on your part to find the property right for you.

Let's look at the realities behind each investment choice and see what each pro and con brings.

Bringing in More Cash Flow

Your best bet for yielding faster cash flow is investing in a single-family property. Despite it being challenging in today's market to find single-family homes, the returns on them are making investors wealthy.

Here in Northeast Ohio, we see many people making as much as $600 net profit per month thanks to finding single-family homes for more affordable prices. While it depends on how hot the market is nationwide, you're going to find more affordability in a single-family home compared to buying apartments.

If you're searching in the Cleveland area, you should know the market here is extremely strong, including ranking on an international level. It's why investing in single-family housing is a good idea, particularly if you have income to invest every year over a decade to create a powerful investment portfolio.

Cheaper Management

Your biggest challenge with investing in single-family homes is being responsible for management. Maintenance could hit you by surprise and become a major financial liability. It's why investing in a multi-family apartment building might become a smarter choice because they frequently have on-site management as part of the business model.

In this regard, it's a good source for passive income like you'd find in turnkey properties. Keep in mind managers with true experience in managing apartments will know how to do it better than you do, leaving you more time to do more investing.

Affordability

The true downside to buying multi-family apartments is the cost. Buying an apartment building is a costlier process compared to single-family housing. So you do need more capital, though it's not entirely out of the picture if you have financial limitations.

It's possible to raise money from other investors, especially if you have partners in your property investment ventures. When seeking out investors, be sure to show the risk realities and how you plan to address them. Also prove any past track record of success in prior property investments.

Scaling Your Property Investment Portfolio

How fast you want your property investment to scale all depends on how fast you want to accumulate returns. Buying single-family homes is more difficult to scale because a goal of buying 10 to 20 homes in a year takes an incredible amount of work.

With a multi-family apartment, you go by economies of scale where one building contains 20 different tenants. Through one investment, you basically have multiple homes in one without having to invest further.

Ultimately, it comes down to how much value control you want in your real estate and what your investment timetable goals are.

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