Are you shocked that the real estate market in America is worth over $1.1 trillion now? As the demand for high-quality housing continues to skyrocket, there’s never been a better time to take a slice of this massive pie. Investing in real estate is one of the most lucrative things you can do. If you’ve been thinking about buying property to rent out, then you may be scratching your head at the single-family vs. multi-family property debate.
Would you like to figure out which avenue is best for you? Read on to learn the most important facts.
How Much Money Are You Willing to Spend?
One of the biggest factors that will help you choose between investing in single-family property and multi-family property is how much money you have. Setting a budget will allow you to browse properties that fit within your price range.
It’s always wise to shop around for some mortgages and get pre-approved. Once you have a solid figure in mind, it’ll be much easier to make this choice.
The average investor will fare best with a single-family property because the upfront costs are a lot cheaper. With good credit, you may be able to secure a commercial mortgage that gives you more borrowing power.
Where Do You Envision Yourself Living?
One unique benefit of multi-family property investing is that you could live in one of the units to keep an eye on things. Everyone else who lives on the property will help pay off your mortgage.
It’s still possible to own multi-family property and live somewhere else as long as you’re comfortable with the idea. Whether you own a separate home across the street or across the company, you can count on an expert property management company to handle your affairs.
If you don’t need help paying your mortgage, then there are plenty of other factors you have to weigh.
Are You Someone Who Appreciates Flexibility?
An excellent perk that comes with buying single-family property is that you’ll never be tied down if you decide you want to pursue other investments. The reason why is that individuals and real estate companies are happy to buy single-family homes.
Multi-family homes are more of a niche purchase, which means that you may have to search for a competitive buyer harder. This fact shouldn’t scare you away, but it’s important to know that you won’t be able to enjoy as much flexibility when it’s time to sell.
What Are Your Investment Goals?
Every smart investor has asked themselves what they’d like to accomplish with their money. Having a clear goal in mind will allow you to make a choice that aligns with your vision.
If you want to maximize your cash flow, then multi-family properties are always the way to go. The more tenants you have, the bigger your profits will be. If you want a low-stress investment, then only handling one household might be more suitable.
Where Are You Investing?
The real estate market can change dramatically depending on where you’re looking. For example, bustling cities may not have much room for single-family homes. If most renters are focused on hunting for an apartment, then a multi-family property makes the most sense.
It’s also worth noting that living in a crowded apartment isn’t appealing to most people, and they would choose a single-family home if they could. You can still take advantage of the high demand for housing in large cities by buying a single-family property on the outskirts of the action.
To be successful, make sure you spend enough time researching the area you’d like to invest in so you can keep up with renters’ desires.
Do You Want to Score Deals on Maintenance?
A large portion of the population would never want to own a home even if they could afford it simply because they don’t want to keep up with maintenance costs. As the property owner, you’ll be responsible for keeping everything in top shape.
It’s frustrating to see your profit margin shrink whenever the property requires repairs. One lesser-known benefit you can reap when you buy a multi-family property is cheaper maintenance costs. While you will end up spending more money overall, the cost of caring for each unit will be far less.
The reason why is that you have the upper hand when it’s time to negotiate the bill. Maintenance companies would love to catch a big fish like you, so they’ll be willing to slash their prices.
Do You Have a Sufficient Safety Net?
While real estate is a fairly safe investment, you should always be prepared for the worst-case scenario since the world is unpredictable. Try to imagine what life would be like if you struggled to fill a vacancy.
Multi-property investments can provide extra security since once vacancy won’t matter as much. However, they can be a big problem if multiple units remain empty.
Reflect on how much experience you have as a real estate investor and revisit your assets. People who have a smaller safety net or a low tolerance for risk will sleep easier with a single-family property.
Single-Family Vs. Multi-Family: Now You Know the Pros and Cons
As you can see, there are tons of pros and cons to consider with the single-family vs. multi-family property debate. Both choices have the potential to be incredible, but you need to be in tune with your unique needs. After reading this guide, you should have the information you need to make an informed decision.
Whether you buy a single-family or multi-family property, it’s crucial to ensure you rent to great tenants. If your property is located in the Memphis, Tennessee, area, then Reedy & Company would love to help you get the most out of your investment. Contact us to learn why we’re the best property management company in the area.
