This year is a very unusual one for real estate rental property investing. Any multifamily for sale is going to attract a lot of investor attention. With an overall shortage of inventory for shoppers to consider, a multifamily for sale vs. a single family home for sale choice will be a luxury.
It will be interesting to see if HUD foreclosures become commonplace after the mortgage supports and renter assistance programs run their courses if they ever do. In the best multifamily markets, one may be able to choose from a variety of investment property options for sale.
In this analysis, we will look at how to determine if a multifamily for sale or a single-family for sale is the best option for you. Mashvisor has the tools you need to can find profitable single family homes and small multifamily homes for sale. We can also help you analyze the best return on investment. Here are some factors to consider when contrasting multifamily and single family home investments.
Multifamily vs. Single Family – A Review Of the Basics
When one compares a multifamily like a duplex or triplex for sale against a single family unit, there are important considerations that never change. In most cases, a single family rental property makes a better Airbnb option. So much so that Mashvisor does not even list data for multifamily Airbnb options.
Multifamily units for sale such as conjoined condos, duplex units, triplex units, and similar arrangements where a single property offers multiple rental units are always attractive to an investor planning to rent properties. There are good reasons why multi-unit properties are often an investor’s first choice.
Multifamily units share one structure, one roof, and have one set of vendors that will serve your needs in keeping the property properly maintained. There are real-world efficiency gains to any multifamily. Doing a multifamily property analysis also saves you time in your business. You will be able to evaluate multiple rental units at one time.
Related: Single Family Homes vs. Multi Family Homes: Differences & Similarities
How 2021 Differs From Most Years
If 2021 has revealed anything to investors it is that rental regulations are tightening. With eviction moratoriums, rent control, and even rent cancelations looming across the country, are affordable, or Section 8 targeted multifamily units really attractive anymore?
Multifamily units for sale now come with a big question mark. “If I fill this unit, will the tenant pay rent?” It seems crazy to be asking this, but unless the new regulations relax at some point, adding more rental units that will be occupied by tenants without the ability (or interest) to pay rent is a risky strategy.
On the other hand, a multifamily for sale often comes with major needs before it will be rented. Renovations can take many months, perhaps enough time for the rental market to stabilize. It is your own duty to ask if multifamily for sale is right for you based on this tricky timeline.
Single Family Airbnb Pluses
The upside to Airbnb single family rental options is payment. Unlike a traditional long-term lease, Airbnb renters are not afforded heavy-handed government support. Airbnb rentals are not a residence for the renter in the typical sense of the word, so there is no impact from the rent enforcement forbearance changes.
Single family homes may be overpriced in many metro areas this summer but may return to more traditional cost-per-foot prices in the fall after the hot selling season comes and goes. It is hard to imagine many good deals on single family homes during this inventory shortage.
The Best Multifamily Markets
Mashvisor constantly evaluates the best markets for multifamily homes for sale. Factors that we consider important when doing a multifamily investment analysis include; Median property price, price per square foot, price to rent ratio, monthly traditional rental income, and traditional cap rate. Using these metrics Mashvisor has named Manchester, New Jersey, Naples Florida, and Cincinnati, Ohio as good markets in which to invest in multifamily rental properties. Check out our full list below for more options.
The Best Single Family Markets
Single family home investing take many forms. Those looking for the best market in which to invest in inexpensive single family homes for rent should look at Iowa, North Dakota, and Ohio. Our full list has many more options to consider.
Airbnb rentals are often coupled with vacation rental property data. Advantages to a vacation-style single family home include a low-risk investment strategy, tax benefits, and high equity return on the investment. Our list of the best places for single family investments includes towns in Colorado, New Jersey, Pennsylvania, and Georgia.
Pros and Cons of Multifamily Investment Property
Here is our list of the pros and cons of multifamily investing:
Pros
– Efficient use of time – multiple units from one search
– Long-term benefits to owning still apply
Cons
– Rental regulations have increased
– Occupied units may come with restrictions on tenant turnover
– Unclear timeline for regulations
Pros and Cons of Single Family Investment Property
Here is our list of the pros and cons of single family real estate investing:
Pros
– Fewer leasing restrictions
– Airbnb option
– Vacation rental option adds flexibility
Cons
– Tight inventory compared to prior years
-Market is at its high point
The Bottom Line
Deciding between a multifamily investment versus a single family home or home in which to invest is never an easy analysis. Fortunately, Mashvisor’s property finder makes the search for available properties easy. Moreover, Mashvisor real estate investment tools such as the multifamily deal analyzer can help you analyze which of the available choices offers the best return on investment. Given the unusual market conditions, investors need all the help they can muster.
Joining Mashvisor is easy and risk-free. To get started, check out our free trial program today. 2021 is well underway. Don’t let this year slip by before checking out what investment options await you.