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March 14th, 2018 at 11:00 am

single-family-vs-multifamily-homes

Breaking down key differences between investing in single-family vs. multifamily homes

For those who are considering investing in real estate, it can be hard to pick between a single-family home and a multifamily property. There are a variety of nuances, advantages, and topics associated with choosing a single-family home or a multifamily property as a real estate investment.

Many of the variables boil down to the individual goals, preferences, and experience level of the real estate investor. Simply put, there is no such thing as a one-size-fits-all approach to investing in real estate. Everyone is facing a different financial situation and a unique set of circumstances. It is, however, important to understand the potential pros and cons of each choice before you decide to invest.

Some initial topics for the investor to consider include risk tolerance, ease of management, income needs, down payments, and long-term goals. Both single-family homes and multifamily properties provide an excellent pathway to real estate investing. Before making the leap and purchasing a real estate investment, however, it’s important to understand the pros and cons associated with single-family homes and multifamily properties, so you know which form is right for you.

Single-family homes

While a multifamily property can often offer a higher return, a single-family home can be a great place for the budding real estate investor to start. A single-family residence can be defined as a free-standing residential structure maintained and used as a single dwelling. The name is appropriate, as this type of investment only consists of one unit of housing. Generally, single-family homes are built on a lot that is larger than the structure, so there is often a front yard, backyard, and garage.

The wealth of advantages associated with single-family homes and ease of entry make them a popular choice for beginners. Compared to multifamily properties, single-family homes offer a number of advantages, listed here:

Multifamily properties

As the name implies, a multifamily property includes two or more units of housing, located underneath one roof or within several buildings in one complex. The most popular forms of multifamily properties include apartment buildings, duplexes, ‘quad-plexes,’ townhomes, and condos. Most units will have a dedicated living space as well as its own kitchen and bathroom.

In the vast majority of scenarios pertaining to multifamily properties, the investor will end up with a deed that shows ownership of both the building and the land on which it is located. As with almost any form of real estate, multifamily properties can be owned by one person or a group of investors.

Multifamily properties are a great choice for the savvy real estate investor, as they have the potential to generate a solid income stream, along with decreased risk exposure and steady but modest appreciation. Some of the chief advantages that a multifamily investment property could offer the real estate investor include:

Choosing the perfect real estate investment strategy to fit your individual needs and goals can be a challenge. There is simply no right or wrong answer. Considering the fact that single-family homes and multifamily properties each present a unique set of advantages, benefits, and drawbacks, it is easy to see why real estate investors can sometimes argue so passionately on behalf of their favorite.

This discussion only scratches the surface of the subject that is real estate investing. Connecting with a commercial specialist who will sit down with you, assess your needs, discuss today’s market, and help you identify the strategy that is best for you is a great place to start.

Find a local market expert from Berkshire Hathaway HomeServices California Properties today.

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12 Comments

  • Gary Puntman says:

    I’m sure there is more inventory available for single-family homes, like you said. It can be easier to find the perfect fit for you. It’s good to know that the down payment and maintenance fees can be lower than other options too.

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  • Thanks for sharing this useful information. This will help people to understand the important point that they should keep in their mind when going to invest between single family or multi-family homes. To ensure that your residential property is in good condition and to solve your tenant’s problems, you should hire professional property managers to get the work done properly.

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