You’re choosing a home that you will use as an investment property. What kind of home should you choose? You could invest in a single family home or in a multi-family dwelling. Is one a better investment than the other?
How Much Experience Do You Have?
If you’re looking for a starter home for your rental business, you might consider a single family home. This allows you to develop competence in managing tenants, renting out the home, and coordinating all of the details of repair and maintenance. Trying your investment on a small scale can help you learn how to manage tenants on a larger scale in a multi-family building. However, if you have less experience and you want to manage a multi-family building, you can also partner with an experienced property management company. The company will coordinate the details and you can focus on your investment plans.
Multi-Family Is the Next Step
According to the US News, investing in multi-family buildings “… can allow you to produce more income and build net worth faster, if you’re up for the challenge.”
Multi-family buildings are a more expensive investment than a single-family home. However, they contain many different homes under one roof. This means that you only need to repair a single roof, manage one front landscaped area, and create one set of rules for tenants at a single location. Managing a multi-family building is a lot more work, but it’s more efficient for your time and your money. These buildings also tend to hold their value over time.
You Can Increase Your Appreciation in a Multi-Family Building
When you own a single family home, you can renovate it to make it more functional or higher-end, and you could receive a higher rent for the property. However, if you renovate a multi-family building, this causes all of your units to appreciate. That investment you make in new landscaping plans not only returns to you, but returns to you tenfold.
You can also find more financial opportunities in a multi-family building. For example, if you have a coin-operated laundry, you can make extra money from your building.
What to Consider When You Invest in a Multi-Family Building
When you own a multi-family home, you have increased liability, and you need larger financial reserves. As you consider this purchase, ask for income and expense statements from previous owners to learn whether or not the property is a good investment. Understand the building’s vacancy rate, and get it inspected for large problems before you buy. Also, unless you are very enthusiastic about managing the maintenance and vacancies for the building, you should look into partnering with a management company. Management companies will help you maintain the building over time, so you can focus on your next investment.
Are you looking at Seattle homes to purchase and rent? If so, talk with Lori Gill and Associates. We’re experts in managing Seattle houses and multi-family buildings, and we’re ready to support you. Connect with us today.