What type of investment property is best? This question comes up more than any other from long-term buy-and-hold investors. Which is the best investment for your hard-earned dollars, multifamily properties or single-family properties? I never answer this question because the right answer is different for different investors, as there are advantages to both.
Advantages Of Single-Family Properties
For the purpose of this article, single-family means one unit owned and one tenant (or family) living in the unit. It could be a condo, townhome or detached house.
• No tenant-tenant conflicts: The problem I have run into with owning apartments is that eventually the tenants won’t get along. When this happens, it is common for the landlord to get a call from one of the tenants asking for them to get involved. That is a difficult call to take because there really is not much a landlord can do. When I get a call like that, I will commit to sending a letter to the resident about following the rules in the lease and respecting their neighbors, but outside of that, I cannot do much about small grievances.
• Less maintenance: Apartment tenants tend to be are much harsher on the property than those that live in houses. There is also little to no common area to maintain with single-family homes. If there is, such as in a townhome or condo complex, there should already be an association or manager in place to take care of it. Finally, with single-family homes, it is common to have several owner occupants in the complex, or neighborhood, who care about and take care of the property more than a building full of renters.
• Easier to finance: Financing is a tricky subject and can also be an advantage of an apartment, as we discuss later. The money an investor can earn on single-family is the best money out there. It is relatively inexpensive with a long-term and fixed interest rate. In a lot of…