Many new buyers and long term investment buyers have the same question. "Should I be looking to buy Single or Multi-Family properties for investing?"
There are a lot of things to consider on both sides of this conversation so we're going to try and break down the pros and cons of each option.
Single Family Rental Properties
Single family residences are absolutely the easiest way to begin investing in real estate. In fact, many first time home buyers will live in their new home for 2-3 years before upgrading to something bigger and better while renting their starter home. For those of you interested in building a portfolio of single family homes you should consider the following.
What's for Sale?
Single Family homes in Central Texas are presently in short supply, however, there is a ton of movement within that inventory. This means that there are a lot of houses that are ready to make a quick, competitive deal. If you are looking to purchase multiple homes you may even consider some of the areas surrounding Austin like Cedar Park, Pflugerville, Buda, or Dripping Springs. The market is booming in Central Texas and we are enjoying a ~7% annual growth rate on average in most of those areas.
Flexible Resale Options
Did we mention that the market in Central Texas is fast? Homes in Austin have spent around 40 days on market average from Listing to signing the paperwork. For you, this means that whenever you are ready to cash out of a specific property you will have a wealth of buyers that are eager to snap up your property once it goes on the market. Additionally, you aren't restricted to a specific type of buyer. There will be other investors interested, first time home buyers, move-up buyers, and flip and fix type buyers eyeing your property.
Low Barrier to Entry
It should come as no surprise that Single Family Residences (SFR) are cheaper on average than apartment buildings That can be attractive to those that want to pay all cash. It is also easier for those that have little money to put down. Additionally, if you are open to the idea of roommates you can collect rent while paying your mortgage to help dive into the real estate game.
Multiple Family Rental Properties
Multiple family homes are perfect for someone wanting to dive into real estate investing. Whether you are looking at Duplexes, Apartment Buildings, or owning 100s of buildings there are several things to consider.
Multifamily is perfect for somebody who is interested in making big leaps with their real estate portfolio. Each building can possibly add 2, 4, 10, 25 units to your monthly income allowing you to grow much quicker than SFRs.
Ease of Closing Contracts
When purchasing apartment buildings you also benefit from the ease of adding units. In SFR there is a contract for every new unit that needs to go through the contract negotiation and closing phases. On apartments, you can bundle a large number of units into a single contract. It also allows for easier management of your investment in the future since your units are all located in a single place.
Return on Improvements
One of the best benefits of multifamily property investing is the economy of scale. While apartment buildings typically have a lower cost per door, management is typically more effective and profitable, and any improvements made can help to lift the value of many units, not just one. If you add a fitness center, you are adding the value of a fitness center to every unit in the community.
Ease of Financial Management
Multifamily property investors also enjoy more control over their income and asset values. Commercial properties like this are valued on their net income, not comparable sales. Landlords have the freedom to not only adjust rents, but to increase operational efficiency and augment income with factors such as laundry, internet service, and more. You can reposition an apartment building in many ways that are beyond the possibilities available to single family home investors.
It is difficult to directly compare the pros and cons of Single Family vs Multi-Family investments. The best bet is to talk with your Realtor about what specifically you want to accomplish with your investments.
2018 W Rundberg Ln #5d Austin,TX $175,000
Rare Find Less Than 5 Minutes To The Domain Under 200 K. Cute 2 Bedroom 1.5 Bath With Indoor Utility Closet. Washer, Dryer. Fridge, And Microwave Convey. Had Popcorn Removed From The Main Areas. Nice Fireplace In The Living Room. Spacious Pr...Epperson Realty Group LLC
4500 E Oltorf St #a-109 Austin,TX $175,000
Updated And Ready For Move-in! Bedrooms Are Separated By The Living Space With A Fireplace In The Middle. Each Bedroom Comes With Its Own Full Bath! Comes With Appliances, Walk In Closets, And Patio. No Carpet! Condo Is Easy To Find; Ground Level,...United Real Estate Austin
1748 Ohlen Rd #101 Austin,TX $175,000
Great Floor Plan With Vaulted Ceilings.large Walk-in Bedroom Closet. Private Patio With Storage. Corner Unit With Mature Landscape. Assigned Parking. Well Maintained Complex With Gated Access And Beautiful Pool. Private Location In Back Of Compl...JB Goodwin, REALTORS
1405 Hartford Rd #202 Austin,TX $175,000
Old West Austin Efficiency. Close To Metro/ut Lines, Downtown, Pease Park.. As Well As A Number Of Hip & Trendy Areas Off West Lynn & Enfield. Appliances Included. Hoa Replaced Siding A Few Years Ago. Hvac Replaced In 2017 And Recently Serviced....Spyglass Realty and Investment
2425 Ashdale Dr #55 Austin,TX $175,000
Location, Location, Location! This 2 Bedroom 2 Bathroom Condo In The Heart Of Austin Is Ready! A Close Walk To Major Shopping, Restaurants & Social Hang Out Spots - This Unit Has It All! Outside You Will Find An Oasis-type Of Pool. Inside There Is...Compass RE Texas, LLC
4213 Galbraith Cv Austin,TX $175,000
Fantastic Opportunity! This House Is Yearning For A New Owner. Needs Some Love (new Floors, Baseboards, Paint, Appliances) But This Is A Great Fit For A 1st-time Buyer Needing An Affordable Entry To The Market, Or An Investor Wanting A Cash Cow. N...Allure Real Estate
2213 Poquito St #115 Austin,TX $175,000
This Unit Is Part Of Austin's Affordable Housing Program. Just 2 Left. This Well Designed 407 Sqft Unit Includes Quartz Counters, Stainless Appliances, And Zero Carpet. Showing Instructions: Sales Office Is The Corner Unit Downstairs In The Buildi...Prospect Real Estate
5616 Emerald Forest Dr #115 Austin,TX $177,900
Cute 2 Story Condo In A 24 Unit Community In Popular South Austin Location. 2 Bedrooms Up W Full Bath. Living, Dining And 1/2 Bath Down. Fresh Paint Throughout And Updated Bathrooms July 2018. Modern, Clean, Great Lighting. Ceiling Fans. Galley S...Listing Results, LLC
909 Reinli St #248 Austin,TX $178,000
Perfectly Situated And Fully Renovated! And, At A Price Point That Is Almost Non-existent In This Part Of Austin! Easy Access To I-35, 290, 183, Acc, Shopping, Restaurants And Entertainment! It's The Only 1 Bedroom Second Floor Unit Over Looking T...JP and Associates Realtors
5937 Hammermill Run Austin,TX $179,000
*buy Quick/close Quick - Remodels Now Selling For $250k+ - It Is Not The Same Old Area Off Pleasant Valley - *now Is The Time Before Prices Jump More - House Is Ready To Make Money For Redo/investors - Big Open Living - It Is Not The Same Old Area...RE/MAX Austin Skyline
9511 Quail Village Ln Austin,TX $179,000
Great 2/1 Town Home Under 200k! Situated Between 183 And I-35. Heb Is Right Down The Street. All Assigned Austin Isd Schools Are Located Within .5 To 2.5 Miles From Your Front Door. Includes 2 Master Suites With Walk-in Closets. Spacious, Open Flo...Jovio
6810 Deatonhill Dr #108 Austin,TX $179,500
This Updated And Spacious Condo In Southwest Austin Is Only Minutes From Barton Creek. The Living And Dining Room Features Views Of The Greenbelt Shaded By Large Oak Trees. Wood Flooring, Stainless Steel Appliances, Granite Countertops. Within Wal...Market Properties LP
5820 Berkman Dr #120 Austin,TX $179,900
Back On The Market--buyer's Financing Fell Through--updated Condo In Windsor Park--near Mueller. Renovated Complex With Lovely Pool, Storage, Gated Parking, And Wonderful Washer Dryer Hook-ups. Granite Countertops, Lovely Floorplan, No Carpet, A...Keller Williams Realty
8400 Jamestown Dr #134 Austin,TX $179,900
Fantastic Condo In Great Location In North Central Austin Close To Research Boulevard. Security Gated Community With Assigned 2 Car Covered Carport. Private Wood Fenced Outdoor Back Patio To Chill Out In. Kitchen Has Been Remodeled Along With Upda...JP and Associates Realtors
15005 Dexler Dr Austin,TX $179,990
Looking For An Off-the-grid Lifestyle? Check Out This Fine Uber-private Lot! Over 1.7 Ac Lush Vegetation, Big Trees, Basically Natural Paradise. Backs To Year-round Indian Creek. Room For Dwelling, Toys, Boats, Trailers, Sheds, Storage, Workshop, ...E-Team Austin Realty
710 E Dean Keeton St #209 Austin,TX $180,000
Must-see Condo Across From Ut Law School. Peaceful Corner Unit On 2nd Story With Covered Balcony Overlooking Waller Creek And Abundant Foliage. Well Laid Out With Areas For Living, Dining, Sleeping, Plus Galley Kitchen & Ample Walk-in Closet. Incl...Spencer Properties
5820 Berkman Dr #206 Austin,TX $183,500
Just Reduced! Cozy Windsor Park Treehouse Condo! Gated Community Experienced A To-the-studs Remodel. This Unit Features Granite Counters, Ss Appliances, Gleaming Hardwood Flooring, In-unit Washer And Dryer, 1 Parking Spot. This Unit Also Has Un...DIGNIFIED DWELLINGS REALTY
4809 Misty Slope Ln Austin,TX $184,900
Nicely Remodeled Townhome Nestled In Beautiful South Austin. Granite, Upper Deck Overlooking Greenbelt. Too Many Upgrades To List. Hurry, It Won't Last Long.refrigerator Washer And Dryer Are Negotiable.Keller Williams Realty
2514 Thornton Rd #11 Austin,TX $185,000
Amazing 78704 Sola Condominium: Features Located On The First Floor, No Steps, Corner Unit. Open Floor Plan Kitchen With A Breakfast Bar, Stainless Steel Appliances, Granite Counters, And Track Lighting. Breakfast Area / Dining Room. Living Area W...JBG Westlake
12225 Abbey Glen Ln Austin,TX $185,000
Two Story Townhome In Gated Community Featuring An Open Floor Plan, High Ceilings, 2 Master Bedrooms, And 2.5 Baths. Updated Appliances In The Kitchen Include Stainless Steel Range, Microwave, Dishwasher, Refrigerator And New Sink/faucet To Match....KW-Austin Portfolio RealEstate
5703 Pino Ln Austin,TX $185,000
Come See This Awesome As Is Home. Bring Your Tool Belt And Imagination! 4 Bedroom 2 Full Baths & 2 Car Garage. Home Has 1286 Sq. Ft And Vinyl Siding. Perfect Flip Home In Great Location And Easy Access To I-35. Good Size Yard Too! Come See The Po...Coldwell Banker United REALTOR
7801 Shoal Creek Blvd #254 Austin,TX $187,500
Heart Of Allandale /shoal Creek 2/1 Condo Top Floor End Unit Overlooking Shoal Creek. Common Laundry Room At Foot Of Steps. Complex Pool, 2 Parking Spaces. New Range, Fresh Paint, No Carpet. Beck Mgmt Says 66% Owner Occupied. One Block To Shopp...JB Goodwin, REALTORS
1146 Richardine Ave Austin,TX $188,500
Being Sold As-is. Incredible Opportunity For An Investor / Builder Looking To Tear Down And Build A New Home Or Remodel The Existing Property. Great Lot And Endless Possibilities For Your Custom Home! Super Location In Bustling East Austin And Clo...Luisa Mauro Real Estate
6810 Hillcroft Dr Austin,TX $189,000
Fixer Upper! 3/2 In North East Austin. Great Bones And Minor Updating Complete. New Hvac And New Roof. New Back Windows And Back Hardi Board Replaced. Foundation Repair Needed. As Is Sale.Compass RE Texas, LLC
3406 Etheredge Dr Austin,TX $189,000
This Adorable 3 Bedroom/2 Bathroom Home Has A Great Floorplan. The Home Has Upgraded Flooring, A Second Living Room Area Which Makes A Great Study/game Room. Large Master Has Garden Tub, Separate Shower And Walk In Closet. Home Is In Excellent Co...United Real Estate Austin
3109 Caleb Dr Austin,TX $189,500
Greatest Opportunity In The Entire Area! Perfect Starter Home Or Investment Property. Very Well Laid Out And Open 3 Bedroom, 2 Bath Floor Plan. Large Living Area And Spacious Kitchen And Breakfast Area. Central Location To Downtown, N., Or S. Aust...Keller Williams Realty