Single Family V/S Multifamily Home: Which One To Choose For A Better Investment

A lot of people have this question in mind whether single family homes are better or multi-family homes are better to invest in. They assume that if they invest in a multi-family property, it will be better as they are built to produce income to the landlords. Some people believe that multi-family homes are a better investment as they produce more money.

However, our team of commercial property management believes that single family homes can be a great investment as well. In a few cases, single family homes make much more money and are easier to buy than multi-family properties. But so is the case with multi-family homes.

So which one should you go for when you decide to invest in commercial real estate Austin? Let’s find out!

What are single-family and multifamily properties?

A house with one unit is called a single family home which consist of a single family living in the house. Hence, the name “Single family home”. In a few towns, the zoning laws allow more than one family to live in a single family home. Some towns however limit doing so.

For example — if you plan on renting your single family home to 3 to 4 college students, the zoning laws will not allow it as they are unrelated to one another.

If the property is located in an area where multi-family properties are located, then you can rent them out to a group of people who are unrelated. It will be wise to check with the zoning laws before doing so.

A multi family home is the one that has more than one unit. Duplexes consists of two units and triplexes of three units. An advantage of multi-family properties is that it can be rented out to more than one family depending upon the size of your property (whether your property has 2 units or 3) and you get separate rent from each of the family.

Let us now look at the advantages of single family properties:

Easier to purchase:

The prices of single family houses are comparatively less expensive than multifamily. Bigger complexes fetch more rent, but because of that, their price is much more expensive and are difficult to manage. When it comes to single family homes, the down payment and repair charges are less than multifamily properties. Single family homes are easier to finance too.

Appreciation:

Single family homes appreciate faster than multifamily properties. The value of the multifamily properties depends on the rents coming in, whereas single family homes are valued based on the supply and demand of the buyers or the tenants.

If the rent in the area rises, multifamily housing prices will rise too, provided the rental rates meet the market standards. Value can be added to the properties by repairing them or increasing their rents. Houses will eventually go up the price based on the market value.

Easier to sell:

Single family homes sell faster than multifamily properties. They can be bought by investors or the owner occupants. The demand for single family homes is more because of which they are easier to sell. Their value is also determined on what the owner-occupant homes are selling for or the amount of rent that has been coming in if it is being used as a rental.

When it comes to multifamily properties, you are usually selling them to the investors.

Can be bought below the market value:

Sometimes, with single family homes, you can get them below the market value at amazing prices. Texas real estate firm recommends you buy them when you have the cash to purchase the properties and by making offers quickly.

Good deals are available on multi-family homes as well, but because there are so many single family homes out there, amazing prices below the market value can be grabbed.

Now that you have read the advantages of single family homes, let us go ahead with advantages of owning multi-family property

House hack:

With a conventional mortgage, you can live in one unit and rent out the rest to others. In some cases, you can live for free, as your tenants will be the one paying the mortgage with your rent. This way, you can qualify for more properties because there is more rent coming in from the beginning.

If you own a single family home and no rent out a part of it, there will not be any rent or income coming in unless and until you move out and find a tenant for your property.

Value add opportunity:

Another advantage of owning a multi-family property is that you can buy multi-family buildings that have low rental income. You can then repair those properties and raise the rents which will eventually increase the value of the house.

The best part about this strategy is that you can force the property’s market value to increase which in turn will increase its rental income. The same can be done with commercial real estate in Austin.

More income:

In some markets multi-family properties make more money than single family homes as the rent received on area per square foot is more. You should also be careful that the expenses made on multi-family properties are not higher that it will negate the extra income.

However, if you hire a professional commercial property management services, you will receive the expert’s assistance in managing the property.

Final words

In our opinion, both single family homes and multi-family homes can prove to be a great investment that gives good returns. It all depends on the strategies you use on how to generate the income. The key to invest in either one of the home is to see what suits your needs and budgets.

Once you have a clear idea of what you want from your investment and how much you can afford, you can go ahead and consults the expert’s at Texas real estate firm.

GW Partners the best commercial property management service providers work dedicatedly towards serving our clients and help them get the best returns in return of their investment.

If you are somebody willing to invest in single family or multi-family properties, reach out to us today and let us help you make your investment fruitful.