Rental Property Types Your Guide to Investing in Single Family Home vs. Multi Family Home in 2019 by Abdallah Allabadi January 13, 2019February 4, 2019 by Abdallah Allabadi January 13, 2019February 4, 2019 The ever-lasting debate in real estate investing: Single family home vs. multi family home. Which type of investment property is best? This fierce debate between long term real estate investors has no answer, as the right answer is different for different investors and there are advantages to investing in both single family homes and multi family homes. In this article, we will explore single family home vs. multi family home investing, the pros and cons of each investment property, and what to expect when investing in each. Finally, thanks to Mashvisor’s rental property calculator, we provide you with a list of the best cities to invest in single family homes and multi family homes in early 2019. Single Family Home vs. Multi Family Home: Financing Because single family homes are more affordable than multi family real estate, it can be easier to finance them. This is not always true and can depend on a lot of factors like the real estate deal you land, the condition of the property, and your personal financial standing. It’s also important to keep in mind that many mortgage lenders offer investment property financing for single family homes with a 20% down payment. Whether or not you can afford this will affect how easily you can finance a single family real estate property. On the other hand, financing multi family properties is a bit different. Multi family property with 4 units and less can qualify for a residential real estate loan. For these, you can consider an FHA loan if you want to live in one of the units. That way, the down payment can be as low as 3.5%. If it has 5 units or more, then it qualifies for a commercial real estate loan. In this case, mortgage lenders will want your investing record to see if you have experience with managing rental properties. Single Family Home vs. Multi Family Home: Rental Income When it comes to renal income of single family home vs. multi family home, the latter is the winner, unless of course you own multiple single family rentals. Multi family homes have more units and therefore more rent is collected at the end of the month. When a tenant leaves your single family rental, you face $0 rental income and therefore negative cash flow after paying the mortgage. But with a multi family rental, the chances of $0 rental income is low. If a tenant leaves, the other units will cover at least the costs of the investment property. When deciding between investing in a single family home vs. multi family home, make sure to conduct an investment property analysis for each property to have an idea of how profitable the investment is. This way you will know how much rental income to expect. Related: What to Look for When Investing in Single Family Homes Single Family Home vs. Multi Family Home: Property Management An advantage of owning a single family rental is avoiding tenant-tenant conflicts, which many multi family real estate investors run into. Many real estate investors choose to invest in single family rentals for the peace of mind. If you are planning to manage your property by yourself without hiring professional property management, then managing a single family home is easier than managing a multi family property. If you have multiple single family rentals scattered in different locations, then managing multiple units under one roof is much easier. Having everyone in the same location makes property management easier and cheaper. Simple economics, multi family homes offer economies of scale. For that, the price per unit for managing multi family rentals is significantly lower than that of single family rentals. Moreover, hiring professional property management is more feasible with a multi family home, especially if you lack experience and time. Single Family Home vs. Multi Family Home: Portfolio Diversification The key to mitigating risks in real estate investing is without a doubt portfolio diversification. Owning an apartment building of 4 units is much riskier than owning 4 single family homes. If property values drop in the area of your multi family rental, then you risk your investment losing its value due to depreciation. By investing in single family homes, you spread your money in different neighborhoods and markets. Nevertheless, single family homes are riskier when it comes to vacancies. That’s why, as a real estate investor, you should aim to diversify your portfolio by owning both single and multi family properties. Related: How to Make Money in Real Estate with Multifamily Investment Property Single Family Home vs. Multi Family Home: 2019 Investment Guide Whether you are investing in single family rentals or multi family rentals, Mashvisor provides the ultimate tools that can help you decide. Mashvisor’s property finder tool and heatmap analysis save your time and effort when looking for an investment property to buy. The rental property calculator from Mashvisor provides important real estate calculations such cash on cash return, cap rate, and rental income for properties in markets in the US. Moreover, the tool uses predictive data analysis to help you decide which rental strategy is better for your investment property– traditional vs Airbnb rentals. Related: Mashvisor: The Best Rental Property Calculator You Could Ask for The following list is where you want to put your money in 2019. Best Places to Invest in Single Family Homes 1- Charlotte, NC Median price: $371,455 Traditional rental income: $1,471 Traditional cash on cash return: 1% Airbnb rental income: $2,249 Airbnb cash on cash return: 3% Airbnb occupancy rate: 57% 2- Orlando, FL Median price: $352,859 Traditional rental income: $1,651 Traditional cash on cash return: 2% Airbnb rental income: $2,370 Airbnb cash on cash return: 3% Airbnb occupancy rate: 64% 3- Jacksonville, FL Median price: $308,590 Traditional rental income: $1,334 Traditional cash on cash return: 2% Airbnb rental income: $2,044 Airbnb cash on cash return: 3% Airbnb occupancy rate: 55% 4- Baltimore, MD Median price: $219,404 Traditional rental income: $1,522 Traditional cash on cash return: 3% Airbnb rental income: $2,180 Airbnb cash on cash return: 4% Airbnb occupancy rate: 59% Note: The Airbnb rental data above is based on listings on Mashvisor. Be sure to check Airbnb regulations for each city before choosing this rental strategy. Best Places to Invest in Multi Family Homes 1- Berkeley, NJ Median price: $99,999 Traditional rental income: $1,800 Traditional cash on cash return: 11% 2- Hattiesburg, MS Median price: $153,000 Traditional rental income: $1,715 Traditional cash on cash return: 8% 3- Hampton, VA Median price: $113,567 Traditional rental income: $1,373 Traditional cash on cash return: 8% 4- Boca Raton, FL Median price: $271,950 Traditional rental income: $2,000 Traditional cash on cash return: 7% Start looking for investment properties now with Mashvisor. To start your 14-day free trial and subscribe to our services with a 20% discount after, click here. Start Your Investment Property Search! START FREE TRIAL Baltimore MDMulti FamilyOrlando FLRental IncomeRental ManagementSingle Family Home 0 FacebookTwitterGoogle +PinterestLinkedin Abdallah Allabadi Abdallah is a civil engineer with Masters in Real Estate and Facility Management. 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