SHOULD I INVEST IN SINGLE OR MULTI FAMILY HOMES?
When investing in the US Buy to Let market one of the biggest questions investors have is should I buy a Single family home or a Multi family home. We asked Global Investments Incorporated CEO Mike Moodie what his thoughts were on this subject and what advice he would give both new investors and his seasoned investors.
Mike was quoted in saying. “ Well its actually a very difficult subject as both in my opinion have their advantages and dis-advantages so the investor really needs to evaluate their long term goals along with the pros and cons of each and then make an informed decision. Of course we can guide our investors in the right direction but ultimately the final choice is theirs. “
Mike and his team have outlined what they feel are the pros and cons of each.
Single Family Homes
1. Pros – These in our opinion are the safest options especially for the new investor. As markets fluctuate up or down there would always be a demand for this type of property. The other advantage is that of course you are only dealing with the one tenant and not multiple families. (This also means things like lawn up keep and snow removal would be the responsibility of the tenants and not the landlord, unlike multi family homes where the norm would be that the landlord is responsible for this) Also normally a Single family home would be smaller than most Multi family homes so when we discuss maintenance in future years this should be minimal and less than a large Multi family house.
2. Cons – When looking at capital appreciation normally you would expect a Multi family dwelling to appreciate more due to its size and sqft. Yes Single family homes are a lot easier to acquire but when it comes to growth this would be slower than the multi family homes. Also one of the disadvantages of a Single family homes is that if the property is vacant you would have zero income until the management company replace the tenants whereas with a multi family home they can loose a tenant but can still produce an income with the other occupied units. It is rare to see a Multi family home totally vacant.
Multi Family Homes.
1. Pros – If you are looking to acquire a large number of properties and build a large or small portfolio then a multi family property would allow you to do this quicker than buying the Single family units allowing you to grow your investment portfolio quicker. Generally a Multi family home would be cheaper to manage as the income revenue is normally much higher than that of a Single family home. Also Capital Growth would be expected to be higher with a Multi family home than with Single family homes.
2. Cons – The purchase price of a multi family home would be more than a Single family so the initial outlay for investors could be substantially more. The biggest problem with the multi family house is availability of good stock. They can be very hard to find in good neighbourhoods like the Single family homes so from an investment point of view this is a riskier option. (Anyone buying a multi family home should look carefully at the area and the neighbourhoods that you are buying in, there are a lot of homes like this that are located in bad areas)
Mike added. “ Like I said earlier, ultimately the decision is down to the investor but my advice is to run the numbers and do your homework on the area and the management. Obviously our clients rely on us for guidance but the long term goal is important along with the investors expectations. I think as a novice investor the SFH or Single family dwelling is the better choice and will let them understand the market for substantially less of an investment, whereas for a seasoned investor looking for higher returns and quicker growth maybe the Multi family would be the way to go. “
Global Investments incorporated provide both good Single and Multi family homes in all of the locations that they sell in. If you would like more information on any of these investments please email Mike or any of the team at Global at email@example.com