We’re constantly being asked about investing in single-family properties versus multi-family properties. Which is better? Last time, we discussed the pros of investing in multi-family properties, so today we’ll look at the pros of investing in single-family properties so you can decide for yourself which is better.
To reiterate, a single-family property is defined as a residential dwelling built on a single lot with no shared walls. Traditionally used for owner-occupancy, single-family homes can also be used as an investment vehicle to generate monthly income. With record-low mortgage rates and fast-rising rental rates, these properties offer an assortment of pros.
One of the more obvious advantages is cost. The price of single-family investments is generally much lower than multi-family investments. Single-family investments also tend to appreciate more than other types of properties. This could be for a variety of reasons, but it mostly pertains to how lenders value each type of investment.
Single-family properties are generally cheaper and easier to manage.
Single-family homes are valued on the supply and demand of owner-occupied buyers. Although financing guidelines and rules vary from bank to lender, financing a single-family property is usually much easier. Because these properties are typically much more affordable than multi-family homes, many investors will forgo financing options and purchase a property with cash.
Finally, the one aspect that many investors fail to consider when investing in real estate is the cost of managing it, which can vary depending on the number of units. With only one tenant, single-family rentals are much easier to manage.
Investing in real estate, whether it’s for single-family properties or multi-family properties, is not something to enter into lightly. If you have any questions, please give us a call or send us an email. We look forward to hearing from you!
As real estate professionals, we're constantly asked whether single-family or multi-family investment properties are a better option. It's one of the great debates in the world of real estate investments.
Because these properties are viewed so differently by investors, insurers, and lenders, it’s important to understand which investment does what for you as an investor and buyer. Deciding between single-family or multi-family properties is largely about personal preference and goals, as well. Today, in the first video of our series, let’s discuss multi-family investments.
A multi-family property is defined as residential housing with two or more units under one roof or several buildings within one common complex. The most common examples are duplexes, townhouses, and some types of condos. As an investor, there are several advantages of owning a multi-family property like one these.
Multi-family investments have less risk and a great cash flow opportunity.
Multi-family investments represent an innovative cash flow opportunity to generate income from a single investment. Rather than rely on one tenant for rent, you have multiple families or tenants paying rent. You also have more control over the value. The more income a property receives, the higher the value is. Because multi-family properties are comprised of more units, these types of investments are generally valued higher than single-family homes. With more tenants, you're also presented with less risk.
Rather than purchasing individual properties and building you business one transaction at a time, multi-family investments are ideal for those who are looking to both build a business and offset risk.
In our next installment, we'll discuss single-family investments to give you the full picture. In the meantime, if you have any questions about property investing or about McAllen real estate in general, give me a call or send me an email. We'd love to be a resource for you!
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“We sold the house in about 10 days from the time we first listed to when we had an offer. The whole process working with Ryan and Brian’s team was very smooth. We did have some unexpected complications the first day we were going to be showing on – we were surprised to get up in the morning and find that we had a bee hive that had just showed up on the side of the house. It was a massive. The Ryan and Brian Team worked well with us to get the showings either cancelled or rescheduled. It all worked out in the end. They worked with us and even with that delay, we still sold in 10 days. The experience was very good and very positive. I highly recommend them to everybody.” -Michael
