Single-Family VS Multi-Family Homes

Single-family

Multi-family

They are suited for investors looking to own their own house while holding onto an appreciating asset. They can be used to collect rental income from a tenant as well.

They are most suited for collecting rental income and also potentially appreciating.

They require lower capital investment and are easier to manage and maintain as they only have a single unit and tenant.

Managing multiple tenants and units can be more costly and complex. The capital investment upfront is usually higher, meaning the investor could stand to lose more should things not work out. On the flip side, the risk from vacancies is reduced due to having multiple tenants from which to draw a stable cash flow.

Based on a per unit basis, the purchase cost per unit is higher in homes as only a single unit exists to distribute the cost. 

Thanks to having significantly more units, the overall purchase price is distributed amongst many. Additionally, property management costs are typically lower overall due to economies of scale.

While a single-family home may generally command a higher rent from one unit, this is offset by the potential of receiving rental income from multiple units.

Regardless of individual unit pricing, as owners collect rent from every tenant, the rental income is almost always higher in multi-family properties.

As owners only manage a single tenant and building, it is generally much easier and less time-consuming.

Having to manage multiple tenants across multiple units increases the likelihood of management involvement drastically, requiring more overhead and time to administrate effectively.

While both have the potential to appreciate, single-family properties tend to do so a little faster because they are usually the more in-demand housing depending on location and market.

While still having the potential to appreciate quickly, due to the scale of the investment, they may appreciate a little slower than single-family properties.

Tenants renting a single house tend to stay longer as they are usually families looking to settle down within a neighborhood and enroll their children in a nearby school. They value their privacy greatly and seek a single building to live in.

Tenants living in an apartment tend to stay for shorter periods as they are usually single or couples not looking for a place to settle down. They tend to value freedom and proximity to work, restaurants, and other services.

Due to the smaller investment capital; it is easier to find a buyer to divest the property to. Current tenants may be inclined to purchase the property as well.

As multi-family properties tend to be a more expensive investment, with a lot more considerations for an investor, there is usually a limited pool of buyers who may consider investing in them. It can take time to find the right buyer.