When it comes to real estate investing, two of the most popular strategies are single-family rentals (SFRs) and multifamily rentals. But which of these investments is better? The answer depends on a variety of factors such as your financial goals, risk tolerance, and investment timeline.
Single-family rentals are exactly as they sound: individual homes or condos that are rented out to one tenant or family. These properties generally require less capital than multifamily rentals, making them an attractive option for new investors who don’t have a lot of money to invest. However, SFRs can be more expensive on a per-unit basis and may require more time and effort to manage, as you’ll have to take care of individual tenant issues on a case-by-case basis.
Multifamily rentals consist of two or more units that are connected and rented out to multiple tenants. These properties can be more cost effective to purchase than SFRs, since they often provide economies of scale in terms of management and upkeep. On the other hand, they may require more capital upfront to purchase or rehab, and they usually come with a larger financial responsibility in case you experience vacancy rates due to tenant turnover.
Ultimately, which type of rental property is best for you comes down to your individual financial goals and risk tolerance. If you’re looking for an investment that requires less capital upfront, SFRs could be a good option. On the other hand, if you’re looking for an investment with more potential to generate income and appreciate in value over time, multifamily rentals might be the better choice. Whichever type of rental property you decide to invest in, make sure to do your research and consult with experienced professionals to make sure it’s the right decision for you.
If you need financing for commercial property investments, contact the team at Private Client Capital Partners today.