Multi-Family vs. Single-Family Acquisition—What’s A Better Option?

The fourth quarter of 2019 held immense importance for New York’s real estate market. The market was struggling in the first two quarters, but in the last quarter, it finally began to achieve stasis. Deals worth $4 million were signed in December alone!

Two of the most common investment options that New Yorkers have are single-family and multi-family acquisitions. Let’s look at which option is better:

What are the basic differences?

Single-family real estate acquisition refers to buying properties that consist of one property unit. These houses are typically built for one family usage. Common examples are condos or townhouses.

On the other hand, a multi-family property is built for more than one family. They comprise multiple housing units. Properties like buildings, apartments, triplexes, and duplexes fall under the category of multi-family homes.

Let’s look at the matter from a real estate perspective:

What’s a better option to invest in?

Here are a few factors that potential investors need to consider:

  • With a single-family unit investment, the main objective is to make a quick buck. These kinds of properties are an ideal choice for fix and flips. You first locate a reasonable spot, purchase the house, make renovations, and sell the house for a higher price.
    On the other hand, people usually invest in multi-family properties if they intend to keep them for a long time. Such investments don’t generate income in one fell swoop. Instead, the cash flow comes in month after month.
  • As an investment idea, multi-family investment projects have higher scalability. In the case of a single-family investment, this potential is rather limited. Here why: there is a limit to how many houses you can fix and flip at a time. Most investors only opt for single-family investments if they’re planning on making profits at a slow but measured pace.

With multi-family units, you’re buying multiple housing units. With an increase in the number of housing units you’ve acquired, you get a greater chance to make higher incomes. Each unit is like a separate property unit of its own.

  • Single-family units are riskier when it comes to renting them out. You do make monthly income on the unit, but as long as the tenant is on board. If you evict the tenant or they leave on their own, there will be no cash flow to pay the mortgage. This may make you fall behind on your bills.

With multi-family units, you generate greater cash flow. If you’ve rented out a 20-unit property, the loss of one tenant won’t make much of a difference.

Whether you want to invest in a single-family or a multi-family option, Global Capital Partners Fund LLC is your go-to option for financing.

Head over to their website to explore various commercial real estate financing options in New York.

Categories: Real Estate

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