While many real estate investors prefer one type of residential property over another, the truth is that it is possible to achieve success with either. Single Family or Multi-Family Rentals Which Is BetterWhat makes the biggest difference is whether or not you follow a particular investment strategy.

There can, however, be definite advantages and drawbacks to owning either single family or multi-family units. These can include the following:

Multi-Family Properties

Owning multi-family properties can be a great way to increase your cash flow exponentially. This is because if you own a 2- or 4-family building, you can have numerous tenants paying you rent all at the same time. The flip side is that you will have more tenants to manage – and possibly more phone calls to field in terms of leaky faucets and other issues. Some of the other advantages and drawbacks that go along with owning multi-family property include:

  • Better net cash flow potential. With multi-unit property, you have the potential for better net cash flow in comparison to single family property. This is because your price per unit is oftentimes lower.
  • More consistent cash flow. When you own multi-family property, if just one tenant moves out, you won’t lose 100% of your rental income – so you will still have cash flow coming in while searching for a tenant to fill the vacancy.
  • More difficult to find financing. When purchasing multi-family property, it can be more difficult to find financing. You may also need to have a better credit score, and other financial resources – especially if you are just getting started in this area of real estate investing.
  • More difficult to sell. When the time comes to sell a multi-unit property, it can be more difficult to locate a buyer. With that in mind, the property may stay on the market for a longer time period than a single family property.

Single Family Properties

There’s no question that many people prefer living in single family residences. These units can provide a great deal of privacy for your tenants, as well as room to grow. They can also, however, be a lot more work. The primary pros and cons to owning this type of property include:

  • Large pool of potential tenants. Because so many people enjoy living in single family homes, you have a large pool of potential tenants. These properties will also be easier to sell than a multi-family property when the time comes to do so.
  • Higher rent. Although it can depend on the area, you can usually charge a higher amount of rent for a single family property as versus a multi-family unit.
  • Price appreciation. In most cases, the value of a single family property will also generally appreciate at a faster rate than that of a multi-family property.
  • Loss of cash flow when vacant. Unfortunately, a single family property can be an “all or none” situation in that, when your tenants move out, you lose 100% of its cash flow until the next renter moves in
  • More difficult to manage. This type of property can also be more difficult to manage – especially if you have several single family residences that are located in different areas of the city. In this situation, you may need to consider a property manager.

In either case, investors can be successful if you just work your plan. You can also reduce your time dealing with tenants and maintenance issues by partnering with a competent property manager. This will allow you to still reap the benefits of your investments, without taking time away from other obligations. For more information on working with a property manager in the Orlando and surrounding area, Contact Us.