On your way to financial freedom, there are questions you need to answer. One of them is whether you should focus on single family homes or multi-family properties for your investing strategy? Well, the choice is up to you, but there are some things to consider as you decide which way to go.
Over the last few years of my real estate journey, I’ve been around the block in my experiences. I’ve worked with single family homes galore, and built up my portfolio with several multi-family properties. This experience has taught me plenty, absolutely, which is why I have my favorite of the two.
Now, my husband and I do not agree on this. He has his favorite and I have mine, so I want to share our different perspectives and preferences on this to give you an overall picture of what to expect.
Either way, though, investing in either is always better than investing in nothing. Just get moving.
The Ultimate Guide to Multi-Family Investing
Part Two: Single Family Homes or Multi-Family Properties?
There’s one thing to keep in mind whether you are working with single family homes or multi-family properties and that is your tenants. While it might be a frustrating pill to swallow, the quality of tenants in general is usually pretty tied to the monthly rent of the property, and the purchase price that is being asked (or you paid).
Higher income tenants equals higher quality renters. This is not a rule, but it is definitely a reality experienced by landlords and investors across the country for the majority of locations.
In addition, tenants who have something to lose in the property also make excellent renters. For instance, our lease option tenants cause far less damage to a property when they are working to buy it in the contracted period of time.
Another thing to keep in mind is that single family home renters usually stay quite a bit longer than apartment renters. This is just part of the overall big picture to keep in mind as you decide your investing strategy.
Got it? Great. Let’s continue.
The Vote for Investing in Multi-Family Properties
Obviously, we have invested in both types of properties over the past few years, but all of that experience has taught us which ones we each prefer. My husband definitely loves working with multi-family properties. He is a numbers guy and loves to work out all the finances and cash flow that a property can provide, which is higher and more exciting than is typical with single family homes.
Remember, in Part One I explained that multi-family properties are valued based on their income, not yours. This is a big deal to keep in mind, as the best finds generate awesome cashflow without at all being connected to your income level to afford the property.
In addition, it is simple to increase that cashflow by fixing necessary maintenance needs and then increasing the rent properly. Or, you can increase cashflow by lowering various expenses for management and maintenance. Both of these options increase the value of the property without ever being tied to your income at all.
Emotional Sellers and Scaling with Ease
A few more noteworthy things to keep in mind are sellers and scalability. With single family homes, sellers are often in an emotional state as they need to offload their house to move on to some life crisis or change that is happening for them. Now, I personally love this sort of thing, because I adore talking to sellers and being a person to them. I feel it is a critical part of being a great investor.
My husband, however, is not a fan of this sort of thing, so the detached and more analytic side of multi-family definitely appeals to him more than to me. I love numbers, but I love working with people, too.
Last but not least, a final note on multi-family properties is that they are far easier to scale quickly. One new addition of a property could bring in multiple units and their rent incomes. As explained in Part One, a single multi-family property can bring in quite a bit more cashflow than a single family property, so if your goal is to increase your passive income quickly, this is a very important fact to keep in mind.
Raising the Hand for Single Family Homes
Ok, we have discussed my husband’s love for multi-family houses, so now let’s get into my thoughts on single family homes. Yes, I love working with single family homes. They are my favorite to work with and on, even though I still buy apartments and multi-family properties.
The reasons that I love single family homes are because of space, availability, connection, and avoiding problem areas. Let’s talk about space.
Space- the Final Frontier…
If there is one awesome thing single family homes have going for them it is convertible space! Sky’s the limit for what you can do with these little boxes of hope we call a house, and this is even true with other areas like yards, attics, basements, etc. There is more privacy for the renter, and, as I mentioned before, since renters in single family homes stay longer, there is also a lower rate of turnover. For me, this is gold. I can do a good deal of set it and forget it to move on to other properties that need my services.
Another fact that I love is how easy it is to find single family homes to buy. You’ve heard me talk about the importance of driving for dollars and sending out those yellow letters to reach out to homeowners in need. These people are everywhere! Once you know how to find the houses and connect with the sellers, the rest of it comes together so smoothly. Truly, it’s a thing of beauty.
Emotional Connection and Avoiding the Drama
Now, as I mentioned, sellers for single family homes can often be pretty emotional about their need to sell. But, I love this part. It is my passion to talk with sellers and connect with why they need to sell. I love helping them find a plan to move forward in their time of need and that I get to be part of their solution! It pleases me to no end to share stories with them and especially to use the perfect one liner. Talking to sellers thrills me to the core.
Finally, one of the most significant reasons that I love single family homes is avoiding tenant drama overload. The fact is that more tenants equal more problems, and I really try to keep drama and such out of my life if I can. This is also why I prefer to do lease options with my tenants.
When a tenant has some skin in the game they tend to take care of the property where they live. Not to mention that they are responsible for maintenance costs, which saves me plenty and benefits my cashflow. I would rather work with renters who see personal value in the place they live than someone who simply is living there just to get by.
Are You Really Serious About Your Goals?
I know it can be exciting and nerve-wracking to think about all the various aspects of investing, but I want to make it all as seamless and simple as possible. This is why I do what I do, because I want to see you succeed! My courses each have their place in getting you exactly where you want to go.
First Deal Done Fast gets you moving and grooving, setting the foundation for a solid investing strategy. You get the tools you need to launch into action and amaze yourself with the checks you’ll have coming your way.
But, once you have gotten moving, I know that the desire grows to branch out into more complex arenas, like apartments and multi-family properties. This is why I created Apartment Blitz just for you. This next step is a great one, so I make it my business to ensure you have all the tools you need to take it with confidence and knowledge to get those deals done! If you’re ready to move into multi-family properties, Apartment Blitz is definitely the course you need. Click here to learn more!
Find What You Love and Go For It!
Whether you stick with single family homes or move into the glories of multi-family properties, the point it to simply keep growing and building that portfolio and passive income. I know financial freedom is your heart’s desire, so don’t ever stop taking that massive action for your goals! There is not one single reliable reason to think you cannot do this. So, get your head around it, girl. Those goals you thought would never be achieved are becoming your reality, one little step at a time.
