For today’s rental real estate investors, opportunity comes in a wide variety of properties. If you’ve been debating whether to invest in multi-family or single-family rental homes, it’s important to note that there are both pros and cons for both. As a whole, investing in rental real estate offers strong long-term profitability and relatively low risk. Many Syracuse rental real estate investors specialize in one specific property type for a reason.
It takes time and effort to learn the skills you needed to recognize when you’ve found a great property at the right price. But if you need to determine or choose to expand your real estate portfolio, first get a closer look at what both multi-family and single-family rentals have to give.
Before settling on a certain property type, there are several things you need to find out before even starting your property search. For example, you will need to examine whether you will be able to arrange the financing you need, whether you have the right investment team on board, and which property best suits your particular business acumen and investing style.
Multiple investors start by investing in single-family homes for a reason. Though they may not essentially be “easier” to buy, they can be less overwhelming for investors who are just starting. Arranging to finance a single-family residence is a very easy procedure that numerous investors are already aware of. What is more, learning the ropes by managing just one property and one tenant can help new investors get confident without getting intimidated. There is a lot to learn about buying and managing rental real estate, no matter what form of property you want.
On another note, investors can quickly gain knowledge about real estate investing by buying a multi-family property as a single-family rental. There will be extra research required, and financing can sometimes be a test. But with multiple tenants, you can expect multiple streams of income to negate the higher expenses. Even though all multi-family properties can deliver steady income and higher profits, the smaller multi-family properties, like duplexes or triplexes, can sustain great potential for rental property investors who want to go in a new direction. Properties with four units or less can also be financed using conventional mortgages, making them more accessible in that way.
Most investors prefer to invest in single-family properties compared to multi-family properties because they tend to have a more stabilized appreciation and fewer challenges. Under normal circumstances, both types of properties appreciate over time. But calculating expected appreciation on a multi-family property can be a little more difficult versus the single-family property.
The same relates to property management, including leasing and tenant relations. The more tenants you take, the more time and effort it will require to communicate effectually with everybody, accomplish usual property evaluations, and finished everyday property maintenance. If you employ a professional property manager, you may be able to get a reduced rate for a multi-family property. But the amount you will end up spending would be higher because that percentage is usually based on the number of tenants you have, not your total rental income.
Lastly, it’s important to factor your exit strategy into your real estate investing decisions. When the opportunity arrives to sell your rental properties, single-family homes are trouble-free to sell. This is because demand tends to be higher for single-family homes, and increased competition means a better sales price for you. By comparison, selling a multi-family property can take longer and be much more problematic to arrange, simply because you are limited to investors looking for multi-family properties. Because they are investors, they will be much more willing to disregard your property if it isn’t priced low enough to make it worth their investment dollars.
Ultimately, the category of property you want to invest in depends on you. But now that you’ve got a great understanding of the pros and cons, you can identify what best fits your investing goals.
Now that you’ve invested, are you getting the most out of your location properties? Look no further than Real Property Management Northern Utah! Contact us online or call 801-546-1770 and ask our Syracuse property managers about our FREE market analysis.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.