Single-Family Property Investments vs. Multifamily Property Investments: Which Property Investment Is Right for Me?

Posted on September 24, 2020

tall buildingsSo, you’re thinking about investing in real estate. Or, maybe you’ve already decided. While the decision is not one to make lightly, it’s easier to determine than what comes next.

Now you might be asking yourself, which is the best investment – single or multifamily property? While this decision needs to be based off your individual goals, we’ve outlined a few considerations and differences as you make your decision.

Obtaining a Mortgage/Loan
An investor is limited to ten traditional mortgages, after which the investor will need to look outside of that scope and into private money or portfolio loans. Investing in a multifamily property means you can maximize and leverage your mortgage to your advantage. Even though a multifamily property has multiple units, it still counts as only one mortgage. Owning a multifamily property also allows investors to diversify and expand their portfolio faster than owning multiple single-family properties.

Revenue Flow
Investing in a multifamily property will typically have a higher rate of return and consistent revenue earnings due to their nature of multiple units. If a single-family property is vacant for an extended period of time, it could lead to a financially tight situation. A multifamily investment provides a safety-net of sorts for this instance. If only one unit is empty, your income will remain relatively unaffected.

Exit Strategy
Having a solid exit strategy is an important piece to consider before investing. Is this property going to be a burden or difficult to sell when the time comes or in the case of an emergency? The bottom line – there is usually a higher demand for single-family properties. Most of these renters are looking to buy, giving the investor an easy exit strategy. Multifamily properties have more factors to consider, making them more difficult to sell. For example, multifamily properties do not increase in value as traditional single-family properties do and face a limited number of potential buyers.

This is only the tip of the iceberg when it comes to considering property investments, but they are important ones.

For more guidance on multifamily investments, contact CGI Real Estate Investment Strategies at info@cgistrategies.com.

Resources

Listen,Money Matters
MashVisor
BiggerPockets.com

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