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The 4 Major Differences Between Single-Family & Multifamily Rental Properties

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The 4 Major Differences Between Single-Family & Multifamily Rental Properties

If you’ve been considering investing in real estate, you may have debated which type of rental property is the “best investment.” Although, the answer to this question is completely dependent on what best fits your investing goals.

Single-family rentals refer to properties that house either one tenant or a single-family. These properties include a house, condo, or townhouse. Alternatively, a multifamily property houses multiple tenants or families. These properties include apartment & townhouse complexes, duplexes, and triplexes. 

Below is an overview of the four major differences between the two investment types to help assist you in your decision-making process.

Accessibility

Of the two, single-family homes are easier to start investing in due to their affordability and property management. 

Single-family properties are typically less expensive than multifamily, and when calculating a 20% down payment it may be more accessible for a beginner investor.

Single-family homes are also easier to manage since there is only one tenant occupying the property as opposed to managing an entire apartment complex.

Demand

Although, the affordability and accessibility of a single-family property does not make it a less valuable investment. In fact, the demand for single-family homes is especially high. 

According to a recent report from Redfin, 36% of saved searches by Redfin users were for single-family homes in May, which is up 33% from February 2020. Meanwhile, the searches for multifamily homes have declined.

Expert Level

Arguably, a multifamily property is better suited for a more expert investor given the higher demand and attention they require. A multifamily property such as an apartment complex can require repairs and renovations to multiple units which results in more time and money spent managing the property. 

For a beginner investor interested in investing in multifamily properties, try a duplex or triplex which only houses two or three families.

Rental Income

Rental income is where a multi-family property becomes more enticing to the average investor. Given that there are multiple tenants occupying the space at once, the cash flow on the property would be greater than that of a single-family home.

In addition, as an investor of a single-family property, there is the risk of having zero rental income if there is no tenant living in the home due to demand or turnover. Fortunately, there are online rental platforms that alleviate some of that risk. And one such platform is, Roofstock.

Roofstock is an online marketplace for single-family rental properties where you can buy or sell these homes. All rentals on Roofstock are carefully vetted and come with a rental income guarantee. Roofstock will pay 75% of the market rate rent if no tenant has moved in within 45 days.

Platforms like Roofstock can help you expand your rental property search and if your purchase doesn’t work out, all of their properties come with a 30-day money-back guarantee. 

Browse Roofstock’s active listings here.

Read more about Roofstock here:

Roofstock Review

Photo by Jacques Bopp on Unsplash

 

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Posted-In: RoofstockNews REIT General Real Estate

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