SFH Investment vs. Multi-Family Investment
The following was a question submitted to TCI: I wanted to know what kind of houses to look for. Some people have told me to just look for single family homes, while other people have told me that multi-family is good... but the single family homes is less management intensive. Which one should I choose??
For a beginner investor, it would be good to focus on single family homes. You don't make a killer profit but there is less management headaches. Also keep a firm management policy as well, but don't overwhelm your tenant.
Both are correct, yet here are some things to consider. With single family homes tenants are more likely to stay for longer periods, especially if the rent is priced right and everything is taken care of. Usually, if the property is in good shape prior to renting, you'll have very few problems with single family rentals if you screen the applicants carefully(ie. background and credit check). Multi-family units often produce more cashflow, however the vacancy rate is much higher. Finding and keeping tenants in multi-units is often difficult and can be time-comsuming. Other considerations are the designation of utilities, are they seperate dfor each unit, landlord paid, or is the bill sent to the landlord and the split and sesnt to the tenat to pay a designated percentage? There are more scenarios, yet you get the idea.