Today’s blog proceedings are to decide whether single or multi-family properties should lay claim to your capital for real estate investments.
Single-family properties state your case….
Did you remember housemates don’t always like sharing walls and laundry areas with their neighbors (usually means more turnover and a heated argument that you will have to referee)? Are you aware that tenants in single-family units often fix minor maintenance issues and do things like cut grass themselves (less expenses for owner)? Did you think instead of fixing one toilet you’d have to fix two or more and one leak upstairs could result in a leak and issues for the downstairs tenant? Is it important to you that you’re able to sell your investment property quickly? Single-family homes could be easier to move. The Single-family can resale as an investment property or owner occupancy. Do you live far away from your investment home without a property manager, which makes it harder to handle repairs and tenant turnover? Do you realize that unlike multi-family unit tenants, renters in single-family homes pay all their utilities? Have you heard that land contracts or rent-to-own agreements could be advantageous for single-family owners? The defense for single family homes has no further questions as this time……
Multi-family properties state your case….
Have you thought about an empty single family home results in zero revenue but a partially occupied multi-family has the benefit of earning at least some revenue if one tenant moves out? And with that said, are you ok with the added stress of potential break-ins while a single family home sits vacant? Do single-family homes offer as much opportunity for alternative use such as “group homes”? As an exit strategy, did you consider that multi-family homes might be more attractive to buyers/investors because they offer more income? Speaking of more income, did you know that many mulit-family homes can be rehabbed/converted to add even more units that allow you to bring in even more income? Do you live out of state without a property manager that makes it harder to handle repairs and tenant turnover? Have you thought about the difference in cap rates (often comparable in current Cleveland market)? No further questions…..
All in, we believe the jury is still out on single-family vs multi-units and it comes down to what type of investor you are and where you are in the process. Said differently, investors should develop their own style and method; however, we don’t suggest new investors purchase a multi-unit home until they get their feet wet with a few single-family homes (biased, yes, but we learned the hard way). To truly master the Real Estate industry, you must be ENGAGED. Know your property. Know your tenants. LEARN THE PROCESS! It is much easier to do this for a first time investor with a single-family investment. Then, the next phase of multi-family investments will run much smoother and bring in that coveted cash flow. Regardless, we think asking these questions help you come to your own verdict.