Barbara's Blog

When investing in real estate there are pros and cons of single-family and multi-family rental properties.  It helps to research both, to determine which would be best for a starter investment.

Pros of Single-family homes as residential rental properties:

1. They are more affordable, requiring less capital and a smaller down payment
2. Residential rental properties are the most tax-advantaged asset
3. There will be more options to choose from
4. They are easier to sell
5. There’s lower management needs and tenant turnover

Cons of Single-family homes as residential rental properties:

1. There is less cash flow from only one lease
2. Vacancy between tenants means no income
3. Maintenance needs can be more immediate
4. A property management company will cost more with only one unit

Pros of Multi-Family Homes as residential rental properties:

1. All the revenue is not dependent on one tenant or one unit
2. Property management services are more cost-effective
3. There is more flexibility to offer long-term or short-term leases
4. You can live in one of the units while still generating income

Cons of Multi-family Homes as residential rental properties:

1. They mean more frequent tenant turnover
2. There is more management work involved
3. More difficult to get financing and may need a thorough business plan for the lender
4. These homes are harder to sell, with most buyers limited to investors

A lot of information and professional guidance is needed to successfully invest in any kind of real estate.  Always seek the help of an experienced real estate agent, tax advisor and lender before moving forward in any kind of rental property purchase.