Single-family rental properties have several benefits over multifamily properties. One of the main benefits of purchasing SFH is that there are often great deals available on the market that provide the opportunity to purchase these properties significantly below market.
It is often easier to purchase a single-family home below its market value than it is to purchase a MF property at discount to its market value. Because one of the largest parts of a profitable investing strategy is getting a good deal on the investment when you buy it, your returns will likely improve significantly if you can find homes that are selling for less than they are worth.
Multifamily properties rarely sell below their market value and often are bid up to reflect the potential value of the property based on expected improvements from the new landlord.
Costs associated with property management can vary significantly based on the tenant population and the geographic location of the property.
Single-family homes that are in desirable areas with stable, higher income tenants can often require less property management than larger multifamily properties, which have higher turnover. Families in single-family homes often consider their situation to be more permanent. This results in less turnover, as well as lower repair and maintenance expense.
Single-family homes can often result in fewer headaches than multifamily properties, especially if you have a stable tenant who will likely live in the home for a long period of time.
While single-family homes have some benefits over multifamily properties, multifamily properties have a few unique advantages of their own.
Unlike single-family homes, multifamily properties were made for the purpose of generating rental income. This makes multifamily properties great for those serving a population with high turnover rates as these buildings were built to be repaired and refurbished frequently.
Large multifamily properties also have the added benefit of a centrally located staff, which helps to reduce costs. Additionally depending on your needs as an investor you may also choose to live in one of the units while self-managing the property.
Both single family and multifamily properties have their own advantages and disadvantages. Different investors may choose to invest in different types of properties for a number of reasons. Additionally many larger investors may choose to diversify their portfolio by investing in both single-family properties as well as multifamily properties.