When deciding to invest in property and rent out housing to tenants, there are many options to choose from. Deciding between apartments, lofts, or a house to rent out takes a lot of considerations. For those looking into invest in a house to rent, you can choose between the main two: single-family or multi-family rentals. Each option has its own benefits:
Renting out a single-family house is a great choice for first-time property investors. This type of housing is one of the more affordable investment properties. If investors are looking to use less money for investments, single-family rentals are the best option. This is because single-family houses have less housing units than multi-family homes. Therefore, they are much less difficult to finance. Overall, renting out a single-family home offers cheaper financing for investors.
Investors will also find that renting out a single-family home comes with much easier property management. Because there are fewer tenants and only one property and there is only one unit to maintain, managing the property is much easier. Although the property is typically managed by the investor instead of professional property management, it is still much easier than a multifamily home. It is also cheaper than hiring professional property management.
If there is ever a time an investor chooses to sell the property instead of renting it out, it is easy to sell. A single-family home is always a favorite of the real estate market and will attract a wide variety of buyers.
Investing in a multi-family property has its own benefits to offer. Firstly, renting out a multifamily home brings in more rental income than single-family homes. Multi-family housing offers more units which means more tenants bringing in more income. This also means there is much less risk of facing $0 in income. If a unit becomes vacant in a multi-family home, there are still other units to keep bringing in rental income.
When it comes to an exit strategy, multi-family housing offers multiple. There is the obvious route of simpling selling the property as a whole. Investors can also convert units to condos then sell them off individually to make much more money off of the property. Bringing in partners with capital to partially cash you out or even refinancing to recoup your original capital then expand again are both financially beneficial options.
There are great benefits for investing in single-family and multi-family properties. When deciding which is the best option depends on the investor and how they are looking to grow their portfolio.