Real estate is a great investment vehicle for your money. But what type of real estate offers the greatest opportunity? Most investors choose from between 2 different categories: 1) single-family properties (like standalone homes), or 2) multi-family properties (like apartment buildings).
Both property types offer unique advantages and disadvantages, but, when you’re looking to put your money to work in the Dallas-Fort Worth area, the benefits of choosing single-family real estate are overwhelming.
Here’s a look at 8 reasons why it’s a good idea to choose single-family properties over multi-family when you want to invest in real estate.
1. More Properties to Choose From
When you’re looking for an investment property, you likely have a checklist of must-haves. You may want a property in a specific location or at a specific price, for example. There are far more single-family properties on the market at any given time, which means it’s far easier to find a single-family home that meets your needs.
You might get lucky and find a multi-family property that includes all of your must-haves. If that’s the case, go for it! But it’s likely you’ll find a better match when you browse single-family homes.
2. Find Options Below Market Value
The best real estate investments are the ones that are made below market value. Because there are so many single-family homes on the market at any given time, it’s easier to find one that is priced below where it should be.
Why would anyone price a home below market value? There are several reasons. Perhaps a family needs to sell quickly, or maybe an owner is using a new agent who is unfamiliar with the area. Either way, when you want to find a deal, you’re much more likely to find a deal on a single-family property.
3. Smaller Upfront Investment
The numbers are typically bigger when you’re dealing with multifamily properties. They include multiple units, which means multiple streams of revenue. But multi-family properties also require a larger upfront investment in order for you to gain access to that revenue.
Some people can afford the upfront cost of multi-family, but most investors are looking to make a smaller investment with lower risk — and that means looking at single-family properties.
4. Financing is Simpler
If you can pay cash for a rental property, that’s great. But, if not, you’re going to need financing — and financing is far easier to secure and manage with single-family properties.
Financing for a single-family property is often less expensive than multi-family financing. You can typically find longer terms, fixed interest rates and, in some cases, higher loan-to-value ratios. Financing a multi-family property isn’t impossible, but it’s far more difficult than single-family.
5. Zero Intra-Tenant Conflicts
One of the great challenges of managing multi-family properties is tenant-tenant conflict. Someone’s dog is barking, or someone’s music is too loud, or someone’s taking up all the street parking. Dealing with tenant-tenant conflict can be difficult and time-consuming.
When you own a single-family rental property, there’s only one tenant and zero intra-tenant conflict. You can focus on developing a good relationship with a single tenant rather than worrying about how your many tenants are getting along with each other.
6. Less Maintenance
Multiple units mean multiple HVAC systems that can break down, multiple appliances that can stop working, multiple spaces that need exterminator treatments, etc. There’s a lot to maintain and a lot that can go wrong and create emergency situations.
You still have maintenance and repair needs at a single-family properties, but those needs are more manageable. For example, when you service the HVAC system, you can reasonably assume it will be a while before it needs service again.
7. Better Liquidity
It’s far easier to sell a single-family home on short notice than it is to sell a multi-family home. Why? There’s a larger universe of people interested in buying single-family homes than there is in buying multi-family properties.
This is especially important when you’re just getting started and just learning the ropes of real estate investing. Sometimes you get a little over-extended and you need to divest. If that’s the case, you’ll be glad you’re trying to sell a single-family rather than a multi-family property.
8. Returns are Often Higher
This really varies from location to location, but, in general, returns are higher for single-family properties. Monthly cash flow is nice, but the larger return that comes upon resale is why most investors get into the game in the first place. If you’re looking for that larger return at resale, choose single-family.
Get Outstanding Management, No Matter Your Property Type
Whether you invest in single-family or multi-family real estate, it’s nice to have an experienced, reliable property manager on your side — a team that anticipates tenant needs and responds to calls for maintenance and repairs. At HUNTAHOME, we are your best option for property management in Dallas and Fort Worth.
As your DFW property management company, we provide a full-service solution or we can fill in gaps in your in-house capabilities. We bring value to each client engagement, helping you to make the most from your investment.
Contact us today to learn more about property management in Fort Worth, Dallas and surrounding areas.