Real estate investing can be a tough business. While it can certainly have its rewards in terms of regular income and appreciation, realizing your full profit potential can often come down to the type of property that you focus on. For example, many real estate investors will focus on either single family or multi-family structures – and, while each of these can certainly have their advantages, the specific goals you have can provide you with some clues as to which will be best for you.
Single Family Investment Properties
With regard to single family investment properties, there are some pros and cons to consider prior to moving forward. For instance, there is typically a much greater selection of inventory with single family homes. Single family homes can also be less expensive to purchase (as versus a larger multi-family property), although you can oftentimes charge a higher amount of rent for this type of home.
In addition, because single family properties can be sold to a wide array of buyers (such as investors or those who are seeking their own primary residence for downsizing, expanding, or many other criteria), this type of property can also have multiple exit strategies. And, on a per-unit basis, you can often reap more profit.
Multi-Family Investment Properties
If you’re expanding your real estate investment business – or you want to start out with more potential income streams – then multi-family property could be a way to go. One of the best features about multi-family investing is that you can obtain numerous income-producing units all at one time – and, in doing so, it can typically require far less time and energy to obtain these units as versus purchasing multiple single family homes.
Due to their economy of scale, multi-family properties can also offer you economy of scale. This refers to the fact that multi-family structures will usually cost less per unit to purchase and to own. In addition, various amenities can oftentimes provide more value to all of the units rather than just one. For instance, if you install a new roof or add a pool, all of the units can benefit – and in turn, you may be able to charge an additional amount of rent to many units as versus just one.
When it comes to management, multi-family units can be somewhat time consuming. Due to potential maintenance issues, as well as the finding and securing of numerous tenants, you could be required to devote many hours per week to your property investment.
In lieu of that, taking on a property management company could be the answer. In doing so, you can still reap the benefits of your property investment, yet spend your time doing other things.
For more information on how to work effectively, and profitably, with a property management team in the Orlando and Central Florida, give us a call.