For today’s rental real estate investors, opportunity comes in a broad range of properties. If you have been discussing whether or not to invest in multi-family or single-family rental homes, it’s important to note that there are both pros and cons for both. As a whole, investing in rental real estate offers strong long-term profitability and relatively low risk. Many New York rental real estate investors specialize in one particular property type for a reason.
It requires time and effort to gain the knowledge necessary to understand when you’ve discovered a fantastic property at the right price. Although if you need to make a preference or are looking to expand your real estate portfolio, first take a closer look at what both multi-family and single-family rentals have to provide.
When deciding on a particular property type, there are many things you’ll need to figure out before even starting your property search. For example, you will need to examine whether you will be able to arrange the financing you need, whether you have the right investment team on the team, and which property is most appropriate for your particular business acumen and investing style.
Several investors begin by investing in single-family homes for a reason. While they might not necessarily be “easier” to buy, they can be less frightening for investors who are just starting. Arranging to finance a single-family residence is a fairly straightforward process that many investors have already been familiar with. Plus, understanding the ropes by managing just one property and one tenant can help new investors get in control without feeling exhausted. There is a lot to learn about buying and managing rental real estate, no matter what type of property you choose.
On the other hand, investors can effortlessly understand real estate investing by buying a multi-family property as a single-family rental. There will be more research required, and financing can sometimes be a challenge. Although with multiple tenants, you may expect multiple streams of income to compensate for the higher expenses. Although all multi-family properties can present steady income and higher profits, the smaller multi-family properties, such as duplexes or triplexes, can hold great potential for rental property investors looking to branch out. Properties with four units or less can also be financed using conventional mortgages, making them more available in that way.
Several investors choose to invest in single-family attributes over multi-family properties because they tend to have a more predictable appreciation and fewer challenges. Under normal circumstances, both types of properties appreciate over time. But calculating expected appreciation on a multi-family property can be a bit more challenging than a single-family property.
The same is true for property management, including leasing and tenant relations. The more tenants you have, the more time and effort it will take to efficiently communicate with each one, conduct regular property evaluations, as well as complete regular property maintenance. If you hire a professional property manager, you might be able to get a reduced rate for a multi-family property. But the dollar amount you will end up paying will be higher since that percentage is usually based on the number of tenants you have, not your total rental income.
Ultimately, it’s crucial to factor your exit strategy into your real estate investing decisions. When it comes time to sell your rental properties, single-family homes are easier to sell. This is because demand has a tendency to be higher for single-family homes, and boosted competition means a better sales price for you. By contrast, selling a multi-family property can take longer and be much more difficult to arrange, simply because you are limited to investors looking for multi-family properties. Because they are investors, they will be far more willing to pass your property by if it isn’t priced low enough to make it worth their investment dollars.
In the end, the type of property you choose to invest in is up to you. But now that you have a good understanding of the pros and cons, you can decide what best fits your investing goals.
Now that you’ve invested, are you getting the most out of your location properties? Look no further than Real Property Management New York Gold! Contact us online or call 347-905-5770 and ask our New York property managers about our FREE market analysis.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
