Crowdfund Beat Editorial,
Real estate investing has long been an enticing option for entrepreneurs looking to expand and diversify their investment portfolios, and for good reason. The housing market crash of the last decade has resulted in a hot rental market, as many Americans are choosing to forgo buying in favor of renting for flexibility and affordability. If you’ve been considering a foray into real estate, you’re not alone in your desire. Many are throwing their hats into the landlord ring, and hoping to make sustainable profits that cushion retirement funds and serve as immediate supplemental income. Before making an offer on a property, there’s one huge question you have to answer: Will you purchase a single-family house or funnel money into a multi-unit complex? There are benefits and disadvantages to both, and it’s important to determine which better fits your financial situation and your personal desires.
Maintenance is much easier on a single-family home, as you only have one thing to deal with, generally one at a time. Repair costs tend to be much lower for these properties and tenants often take responsibility of maintaining their space, which can save you time and money. However, when looking at average costs, multi-unit properties have the advantage. As your tenants will share space, a repair in one portion of the building may simultaneously repair another unit, as in the case of roof damage. A single repair or upgrade could increase the entire value of your property, meaning you may be able to increase your rent rates.
When it comes to affordability, single-family homes are a no-brainer. It’s much easier to attain the right financing for these types of properties (especially with the crowdfunding real estate boom this year), and their initial cost is generally much lower than a complex would be. In today’s market, you’ll also find it easier to locate single-family homes on sites like Trulia.com that are listed under market value thanks to foreclosures and the like, and you may be able to find a property for much less than you would have paid in any other economic state. Generally, you’ll pay less for maintenance as a whole when it comes to single-family homes, and many tenants of these types of properties tend to take care of their own space. Tenants also generally pay their own utilities, which will cut down on your costs and responsibilities (depending on the provisions outlined in your lease). Single-family homes also generally appreciate at a higher rate than multi-unit properties do, so it’s something to keep in mind if you’re looking to garner long-term profits.
While single-family homes come out on top in terms of initial affordability, there’s much to be said about the income potential of multi-unit properties. It’s simple math: the more units you own, the more checks you’ll have coming through each month. This facet also serves as a cushion; if you own a single-family home, should you lose a tenant for a month you’ll simply be out of rent for that period. In terms of multi-unit buildings, you can count on the rent from multiple tenants even if one apartment is to stand empty for an extended period of time. It can also be more lucrative to rent out multi-unit properties depending on your location, especially in highly-populous areas.
More units means a higher amount of vacancies, and this means you’ll be facing the task of securing the best tenants on a more regular basis than you would with a single-family home. If you choose to forgo using a property management service, you may find that interviewing applicants and showing the property multiple times requires a huge commitment of personal time from you. If you do choose to manage your multi-unit property individually, a website like www.mysmartmove.com makes it easy to screen potential renters without having to go through the process yourself. You’ll get all the information you need without having to deal with the paperwork on your own, which is something every busy landlord can benefit from. Single-family homes are definitely easier when it comes to maintaining long term tenants, but there are ways to make it easier to place renters in multi-unit properties with a little bit of investment.
When determining whether you’d like to invest in single-unit properties or multi-unit complexes, there are a myriad of factors to consider. Keep these facets in mind and ensure the greatest chance of success based on your individual needs and capabilities.