The 6 Biggest Reasons I Prefer Single Family Rentals over Multi-Families

It's the great real estate debate: should you invest in single-family homes or multi-family rentals? This can come down to personal preference, but I believe that investing in single-family housing is more realistic and more accessible for most investors.

In this video, I'm sharing the 6 biggest reasons why I prefer investing in single-family rentals. You'll learn about finding motivated sellers and financing options for investing. We'll talk about finding high returns through single-family rentals, and how to grow your real estate portfolio. If you've ever wondered which investment type is right for you, press play!

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[Furtivo]

I called my landlord insurance company to quote me on a 12 unit property I wanted to bid and found out insurance premiums waaaayy more expensive per unit. They also refused to insure the property because it had baseboard heaters! Make sure all gas and electric utilities are separate or else you have to pay those too sending ROI down.

The one big plus of large 20-100 units is you make 1 offer, 1 Inspection, 1 Loan, 1 location, and you’re done. It can take a decade or longer to even find 100 good properties.

[octanoszeus]

I am currently renting 33 years, working making approx 55000+ a year, not much expenses, just started a new long term job

[BReal-qjvo]

The problem that scares me with Single Family Houses are when they are vacant they are 100% vacant and the mortgage is totally on you as oppose to if you had a 2 family or more. You would still have some money coming in towards the mortgage if 1 person moves out.

[kinart]

I like small multifamily, because of almost guaranteed occupancy under one roof. One vacancy doesn't kill your income. A bank will not finance a quad that doesnt make sense financially.

That being said, I believe that you get better quality tenants in SFR.

Do you have a video on how to

[chrisbell]

What do you do with single family homes on a large lot that has potential to build a duplex?
Fix up the existing home or knock it down to build a duplex?
Or do you renovate the home and rent it until it pays itself off and then consider putting a duplex on the property?

[leonhenry]

I guess it's best to have a mix of multi family and single family

[timrichardson]

I think you look like a real life "Woody" from Toy Story. Put a cowboy hat and boots on and let's see.

[marshall]

Still never been able to justify buys a sf rental. Once you actually view your portfolio as portfolio, your in multifamily and your cap rate will be higher buying actual multi-family properties.

[mandyrose]

I believe because single family are larger then a typical apartment the rent is much higher and the typical renter can't afford the house. In my area they are selling beautiful townhouses 2000 sf 3 bd 2.5 bath and loft. They have private courtyards 2 car garage and and community pool, HAO is $250 selling for $ 350, 000 per townhouse. Someone bought it for investment list it for $2500 and can't get a renter, now reduced it to $2300 let's not forget hoa is $250 per month. It's still sitting and he can't find a renter in myrtle beach.

[kendavis]

Dang, Morris, I don't often disagree with you, but here is one where I do (minor ways). Maybe I have just had a good experience in the one multi-family investment and a couple of "less good" experiences in my single family units. I'm a minority investor in a 78-unit (yes, I have mentioned that before) apartment that I have never seen nor stepped foot on. It was mildly distressed when I signed into the LLC prospectus/offering letter, but at the time it was leased out at just under 90%, and the business plan (and loan) included a bunch of upgrades to the vacant units, along with an increase in rents.
The difference between single family (and I have three, not a tycoon, but I understand the difference) and "commercial", is that you have to be really careful on what you spend to upgrade a single family to attract a higher rent in a given area, because if/when you have to sell it, you are limited in price mostly by "comps" in the neighborhood. Commercial property in the form of apartments allows you to increase the value of the property by both decreasing the number of vacant units AND increasing the rent by upgrading vacant units while they are vacant and awaiting (in what is a pretty hot market, thankfully) the next lessees. But on a $75K investment (multi-family LLC), we are pulling down about $470/month. However (and here is the thing I love about commercial, ) the lead investor managing the property has the current rent roll to 100%, at higher rents overall (yes, we have skips, short pays, all the apartment crap, but also new exterior paint and interior paint if a unit becomes available, new fencing on the perimeter, etc. We're about to go into a "rough month" where 8 units will be vacant for all or part of the month (there were skips and a couple of evictions), but 5 of those are pre-leased already, and it's a hot market for rentals. Also, I didn't mention, but the roughly $5.7k/yr we're getting now from the LLC comes with an accompanying 1099 each year showing a $1200-ish loss, so that income is tax-free.
And best of all - with multi-family, when you have increased the value of the property, it is evaluated by lenders as commercial property. So as we are about to refinance it, pulling down equity, it looks like we'll get back about $40K-ish of our original $75K investment. That will obviously result in a lower quarterly stipend, but it frees up capital (ours) to do further investments. I can sell any of my single family units, but it doesn't matter how long the tenants have lived there, nor how many improvements I've done to the properties, the money I get as seller is going to be almost completely dictated by nearby "comps".
But I love your channel, man, despite this philosophical disagreement. And thumbs up! If nothing else, I think we all should proselytize on the value of real estate investing. And you are right about the challenges of "finding the deal" in multi-family. They are few and far between for those like me who are seeking to generate retirement income. There are more of them out there, though, for those who want to buy into something that has been run into the ground and that needs a ton of investment and a lot of time to make money.

Obvious advantage to single family - I'm not sure how many folks can write a check for $75K to buy into an LLC for a piece of an apartment. It is cheaper up front to buy a single family, usually.

[cjcj]

Clayton, I totally agree with you! Thanks for the info! Byw, your skin is radiant! Seriously man, keep up the great work. Let me know what you use for your skin..No distress skin here. Love you man!
Sincerely,
1 fan that been there from day one!

[anthonyjackson]

Do you put your single families under your name or blanket them under one llc?

[bigblue]

Question. Im currently renting a family members house out. Should i get my first Rental property or should i get my own house first than get a rental property???

[premierindustrial]

Good Afternoon Clayton. I have a lot of equity in my personal residence and I was considering opening a HELOC for purchasing some rental properties. Would you include the monthly payment on your HELOC in your cash on cash return calculation?

[BrantPeacher]

What part of Florida do you recommend looking for single family homes at? I could be wrong but I thought I heard you say you own some properties here. I’m from NW Florida.

[o]

are property managers worth it for single property rentals?

[Squatanddeads]

Thanks for the video Claytoris Morris. Very educational. What is your take on Columbus Ohio in investing real estate out of state??

[angelmoreno]

Can I convert my single family into a duplex

[leozilla]

I’m in the military, and going to a new duty station. What do you think about rental near military bases? The government gives us housing allowance and instead of renting I’m thinking about buying a single family. Thoughts? Thanks

[theswampfox]

I commented on the past video “Payoff debt like Dave Ramsey”. Could you take a look? Like to see what you think.