E-Renter Tenant Screening News

Are Single-family or Multifamily Properties Better?

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The housing crisis put an unforeseen number of single-family homes on the market. Many of these foreclosed homes were purchased in bulk by large real estate investment companies, who paid rock-bottom prices, and then refurbished the properties not to resell, but to rent out.

Individual real estate investors found it difficult in many markets to compete with the “big guys.” Some wondered if it was worth it to try, or to focus on multifamily properties.

There are advantages to owning each type of property.

Consider single-family properties if:

  • You like long-term tenants. A recent survey found that renters of single-family homes were 18% more likely to stay for five years or more.
  • You like higher-income tenants. The same survey found that the median household income for single-family home tenants ranges from $75,000 to $100,000, while apartment renters have a median household income of $50,000 to $75000.
  • You like children. While you can’t discriminate against tenants with children anyway, it’s interesting to note that about 63% of single-family home tenants have kids, while only 34% of multifamily renters.
  • You like your property to appreciate. Depending on the market, single-family homes tend to appreciate faster than multifamily.
  • You have more time to spend on your property. Single-family homes are often more demanding of your time.
  • You want tenants to do the upkeep. Often, tenants in single-family homes are required to cut the grass, shovel snow and trim the shrubs.
  • You want an easier time selling when the time comes. With a single-family home, you’ll have a wider pool of buyers.

Consider multi-family properties if:

  • You don’t like to do maintenance. If you’re considering buying a condo to rent out, association fees typically cover the exterior maintenance and repairs.
  • You like more security. If you own a multifamily building and one unit is vacant, you have additional tenants to cover the mortgage and other costs. Not so with single-family homes.
  • You can hire a property manager or make it your primary job. Managing apartments can be a full-time job, so if you can’t do it yourself, consider hiring a PM.
  • You want to appeal to urban dwellers. Multifamily properties are often located in walkable neighborhoods and close to mass transportation, stores, coffee shops, restaurants and other amenities that urban residents of all ages want and need.

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