Is Bigger Better When It Comes to Rental
Property?
Multifamily vs. Single Family Real Estate Investing
by Dave Peniuk
 Many of our readers,
and yours truly, are constantly asking which is the better
buy for an investor: single family
homes (aka SFH) or multi-family
homes (aka MFH)? Well, I am writing this to
FINALLY put an end to the debate!
For the purposes of this article, we'll consider either
investment (SFH or MFH) to be a standard long-term buy and hold
rental property (that means, not a reno, not a flip, not a
Lease to Own, not wholesaling, short-selling, day-trading or
any other real estate strategy out there!).
Now typically this discussion will take you down the road of
buying Apartment Buildings versus Single Family Homes ... but I
am going to do this a little differently today. Sticking with
where my experience has been which is in owning rental property
varying in size from one unit to six units.
So for this article, a SFH is defined as a property
(can be a detached house, condo, townhouse, rowhouse, etc.)
that has only 1 unit and thus only 1 family living in it. A
MFH, for the purposes of this article, is defined as
any property that has more than 1 unit/family living in it.
Thus, it could be a house with a basement suite (2 units), a
duplex (2 units), a triplex (3 units), etc.
Advantages of Investing in Single Family Homes
- Depending on the city/area, typically appreciate faster
than MFH
- Generally a broader range of potential buyers (when
it's time to sell)
- Often worth more on a per unit basis (but this can be a
disadvantage too as you pay more for it)
- More liquid - SFH Can often sell quicker, even in a
down market again due to a broader range of potential
buyers
- Only have to "deal" with 1 tenant, not many
- Tenants don't argue with other tenants because they are
the only ones living there! There will be no issues around
which tenant gets to use the bbq or front patio or even who
puts out the garbage
- Easier to get the tenants to pay for all of the utility
bills again because they are the only ones using them
- Some argue that you get a better "quality" of tenant in
a SFH than in a multi-family, however, I do not necessarily
agree with this. Will discuss why later.
- Financing your
investment property is often simpler and easier to
get.
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