Investing in Single-Family vs. Multifamily Real Estate
Investing in real estate has been a reliable investment vehicle for decades. Passive income, tax breaks, and appreciation are all reasons to invest in real estate. A 2019 Bankrate survey showed that 28% of Americans prefer real estate as their top way to invest money not needed for 10+ years.
While real estate has proven to be a great investment, there are major differences in single-family vs. multifamily investing, including:
- Unit Count – The main and most obvious difference in investing in single-family vs. multifamily is the unit count. When investing in single-family, you own one home. When investing in multifamily, you’re investing in several units under one asset.
- Cash Flow – Multifamily will prove to have a higher cash flow than single-family real estate. This is because of the number of rents you are receiving when investing in multifamily. If you own one rental house, you receive one rent check. If you invest in one multifamily property, you could be collecting rent from 2 to 2,000 units.
- Occupancy – Multifamily investments are seen as less risky than single-family due to diversified tenancy. Because tens or even hundreds of tenants live in the same building, operators do not have to be at 100% occupancy to operate with a positive net income. Additionally, the turnover at the end of the lease term allows for an increase in rent between residents.
- Hands Off – If investing with an operator like Metonic, the investment process is much more hands-off for multifamily than single-family. When partners invest with us, they don’t have to worry about maintenance, occupancy, or collecting rent. If one chooses to invest in a single-family home, they’re likely going to have to handle the maintenance, rent collection, and the possible eviction if necessary. This can be extremely time-consuming and stressful.
- Appreciation – Appreciation can occur quicker with a multifamily asset than a single-family. For example, if you update the roof on the multifamily building, it increases the value on all units, not just one like it would for single-family.
- Price – Many resources will say single-family is the more affordable investment, but if investing in a syndicated deal with an operator like Metonic, that’s not the case. A minimum investment for a multifamily deal with Metonic is typically $100,000. This investment covers capital expenditures including paint, flooring, and upgrading appliances. When investing in a single-family house, one would likely spend at least $150,000 on the home, and then have to pay for any upgrades or enhancements needed.
Investing in a multifamily property with an operator like Metonic makes the investment process much more passive and hands-off than it would be investing in a single-family home. Investing in multifamily real estate provides individuals with an investment opportunity with relatively low risk and relatively high returns. To learn more about investing in multifamily real estate, visit our website at Metonic.net or email us at info@metonic.net.