We've built our entire business around multi family investments, and we feel confident that we made the right decision. Obviously we're biased, but we grew into apartments from investing in single family homes. To help you decide if multi family investing is right for you, we broke down a brief list of the advantages and disadvantages of both apartments and single family homes.

Single Family Homes

Pros

• Typically appreciate faster

Although single family appreciates faster, multi family investments have greater tax benefits.

• More liquid

Single family homes are significantly more liquid than multi family, meaning the actual cash funds of the investment are much more accessible.

• Less resident issues

The less residents you have, the less issues your property managers will have to deal with. This could mean evictions, wear and tear, resident disputes, etc.

• Residents typically pay all utilities

Most home renters expect to pay all utilities. Although you can bill back utilities to the resident (RUBS) with multi family housing, many apartment renters expect utilities to be paid for.

Cons

• Vacancy is riskier & more expensive

If you are unable to turn your home quickly, you are responsible for the expenses in the interim.

• Smaller pool of renters

There are more apartment renters than home renters.

• No economies of scale

Economies of scale are cost advantages derived from increase in product.

Multi Family Homes

Pros

• Better cash flow

Monthly cash flow is greater and more stable. If a resident moves out, you still have income from other renters to cover the expenses in the interim.

• Larger resident pool
• Economies of scale
• Typically less expensive per unit
• Higher rent-to-price ratio
• Better tax benefits

Multi family investments have significant tax benefits for all types of reasons, including capital improvements, new development and section 42 housing.

Cons

• Generally more maintenance

The more residents and units you have, the quicker wear-and-tear damages accrue.

• Limited buyer pool

Apartment investing is a niche market, whereas single family homes are a standard life purchase.

• Appreciates slower

Although multi family investments appreciate slower, the higher return and tax benefits offset it.

• More resident issues

Multi family investments may not be right for every investor, but we've found that most of us that started investing in single family have already or are attempting to transition into multi family investing. To put it simply, the expense to income ration is significantly more rewarding with a multi family investment.