Are you getting ready to invest in income property in Napa? One of the most common questions a real estate agent hears regarding such investments is whether it’s better to choose a single-family or multifamily property.
When it comes to investment real estate, new and seasoned investors alike often have trouble deciding between the two. Ultimately, which you choose comes down to your personal financial goals and risk tolerance. This brief comparison between single-family and multifamily rental properties can help you get started on your exciting investment journey.
First, both single-family residences and multifamily rentals are excellent choices for building wealth. However, there are many considerations to think about before diving right in.
The main differences between multifamily and single-family properties are:
Single-family homes have one dwelling and are unattached to other housing. They typically require less money to acquire and tend to be easier to resell. They also traditionally have lower tenant turnover.
Multifamily properties have two or more housing units, and many have 10, 50, or more units. Multiple units translate into higher monthly cash flow, and many new investors choose to live in one of the units. Depending on where you buy, multifamily properties are sometimes easier to finance, as lenders believe the risk of foreclosure is low due to monthly revenue. One downside to multifamily property investing is lower tenant quality.
If you’re a first-time property buyer, some experts suggest starting with a single-family home because it’s less intimidating, and you get to learn if you’re comfortable managing a rental property. That said, as long as you do your homework and look at all the advantages and disadvantages of both types of properties, there’s no reason not to invest in multifamily housing.
Also, keep these factors in mind if you decide to buy multiple single-family homes to rent out:
Multifamily properties create what’s called “efficiency of effort.” That means you’re only repairing one roof, replacing one boiler, making improvements to one common area, etc.
You’ll need to find local contractors in every location where the properties are located.
The bottom line? As the single-family and multifamily investment market remains strong, any direction you choose can be an excellent path to financial freedom and security!
If you’re thinking about investing in a single-family or multifamily property, talk to one of our real estate agents about the available homes for sale in Napa, CA. We’ll help you take the guesswork out of real estate investment and choose a path that minimizes risk and maximizes profitability.