For today’s rental real estate investors, opportunity comes in a wide assortment of properties. If you’ve been curious 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. Commonly, investing in rental real estate offers strong long-term profitability and relatively low risk. Many Plantation rental real estate investors specialize in one particular property type for a reason.
It consumes time and effort to gain the skills needed to recognize when you have discovered a great property at the right price. But if you need to decide or are wanting to expand your real estate portfolio, first take a closer look at what both multi-family and single-family rentals have to offer.
When deciding a specific property type, there are a variety of factors you need to find out before even starting your property search. For example, you need to consider whether you will be able to arrange the financing you want, whether you’ve got a capable investment team on board, and which property greatly matches your particular business acumen and investing style.
The majority of investors begin by investing in single-family homes for a reason. Even though they may not usually be “easier” to buy, they can be less stressful for investors who are just starting. Arranging to finance a single-family residence is a relatively simple approach that most investors are already associated with. Also, learning the fundamentals of managing just one property and one tenant can help new investors get up to speed without feeling daunted. There is a lot to learn about buying and managing rental real estate, regardless of what category of property you choose.
On the other side, investors can easily determine if real estate investing is for them by buying a multi-family property as a single-family rental. There will be more research required, and financing can often be problematic. But with multiple tenants, you can expect multiple streams of income to counterbalance the higher expenses. Even though all multi-family properties can supply steady income and higher profits, the smaller multi-family properties, including duplexes or triplexes, can maintain the great potential for rental property investors planning to become bigger. Properties with four units or less can also be financed using conventional mortgages, making them more reachable in this way.
Some investors choose to invest in single-family properties over multi-family properties because they tend to have a more predictable appreciation and fewer challenges. In common cases, all kinds of properties appreciate in due course. But calculating expected appreciation on a multi-family property can be a bit more challenging than a single-family property.
The same is true for property management, including leasing and tenant relations. The more tenants you control, the more time and effort it will require to communicate efficiently with each other, execute daily property evaluations, and complete regular property maintenance. If you appoint a professional property manager, you may be able to get a reduced rate for a multi-family property. But the dollar amount you will end up paying will be higher because that percentage is usually based on the number of tenants you have, not your total rental income.
Lastly, it’s recommended to factor your exit strategy into your real estate investing decisions. When it comes time to sell your rental properties, single-family homes are easier to sell. This is because demand tends to be higher for single-family homes, and increased competition shows a better sales price for you. By comparison, selling a multi-family property can take longer and be much harder to organize, basically because you are limited to investors looking for multi-family properties. Since they are investors, they’ll be far more likely to pass your property by if it isn’t priced low enough to make their investment dollars’ worth.
All things considered, the type of property you want to invest in is up to you. But now that you get a clear understanding of the pros and cons, you can decide 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 Premier! Contact us online or call 954-362-5235 and ask our Plantation property managers about our FREE market analysis.
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