Why a Single Family Home Is the Better Investment Than Multi-Family Dwellings

Posted on: 19 February 2021

You may want to get into real estate investing and have considered different options such as apartment buildings or single-family homes for sale. While it's true they both come with different challenges and rewards, one might be the better option if you are new to real estate investing or are a busy person, the single-family home.

Here are some reasons why a single-family home is a better investment than a multi-family dwelling in many cases.

They Cost Less

Wherever you are in the United States, single-family homes for sale will have a lower listing price than a multi-family family apartment building will. In fact, in some areas, you could pay far lower than you would expect for a single-family home. Houses require a lower down payment as well, so you aren't putting your entire life savings on the line with an investment.

It may be possible to buy a foreclosure or a short sale home too if you don't mind putting in a little bit of renovation work before you rent it out. This can also save you money in the long run and get you a good home at a lower price. You won't find as many apartment buildings on the auction block for a good price that won't need as much work done.

They Are Easier to Maintain

If you have a busy lifestyle but still want to invest in real estate, single-family homes for sale are the better option for you. They are smaller than an apartment building and therefore won't take as much time and energy to maintain. The cost of renovations or repairs isn't too bad either. It will cost you far less to repair or replace a furnace or get new windows in a single-family home than it would be to replace windows or a furnace in an apartment building.

You will also need to hire a management staff for a larger building to maintain and clean it daily. You may not have time yourself to do it, and larger buildings need constant cleaning and maintenance. This can be an added expense. You won't have to worry about that with a single-family home as it is much easier to maintain and your renters will clean it themselves.

There's More Financing Available

When you look at single-family homes for sale, you are going to find you will have more financing options available to you than if you decided to buy an apartment building. Banks and lenders are more likely to give you a mortgage or a loan on a single-family home because they are easier to sell in the future, and their value increases faster than an apartment building does.

Many lenders think that apartment building purchases, especially for a new investor, aren't as good of a risk for them. Apartment buildings need more maintenance and will cost the investor more in the long run. It can be difficult in some cases to get a good profit in the early years with an apartment building investment too.