When it comes to investing in rental properties, the common question is: “Which is better, multifamily or single?” Now, first and foremost, you must have the funds to acquire a multifamily property, which can run into the ballpark of hundreds of thousands to millions of dollars. But, this aside, we’re going to assume that if you’re reading this, you’re considering a purchase of either a multifamily property or several single family homes.

In this case, we’re going to provide a breakdown of the benefits of ownership of each option. We only present the benefits because you can assume the benefits of one do not exist in the other; hence, the comparison.

Single Family Rentals

The positives of owning single family homes are many. They are smaller properties, with less work and maintenance. Because of this, they do not require on-property management, which can instead be handled by an off-property management company or personally by the owner.

Single family home owners benefit from lower taxes when compared with those imposed on multifamily properties. There is also a higher appreciation typically associated with single family homes. While multifamily properties can turn a significant profit over time, the flipping game is something to be reserved for single family homes.

Probably the biggest selling point of buying a single family home is its selling point. Multifamily properties are large, more expensive, and reserved for investors. So, there isn’t going to be as large of a market as for single family properties, meaning a faster liquidation option when needed.

Multifamily Properties

A great benefit to owning a multifamily property is the ability to leverage economies of scale. It is easy to realize discounts when it comes to roofing, HVAC, electrical, plumbing, and overall maintenance and repairs due to the number of units the cost is spread across.

When it comes to vacancies, multifamily properties are historically lower on average than single family homes. The reason is simple: it is usually more expensive to live in a single family rental than a multifamily property, so the pool of potential candidates is larger for the multifamily market. Even better yet, owners of multifamily properties aren’t hit nearly as hard by vacancies. One vacancy when every other unit is filled isn’t going to affect a multifamily owner nearly as hard as a single-family owner who has just lost her only tenants.

The third most significant benefit to owning multifamily properties is the value aspect. While the selling price of a single family property is going to cost an investor less up-front, multifamily properties offer a better price per unit. In other words, the dollar goes a bit further with multifamily than single.

The bottom-line: Experts will tell you that both have their strong pros and cons. The best way to approach the decision is to decide based on thorough due diligence and, maybe even more importantly, your own comfort level.