Investors often ask whether it’s better to purchase single family homes or multi-family properties. One is not better than the other, but each property type has distinct advantages that you want to consider before buying property in Indianapolis.
Single Family Advantages
With single family homes, there is a lower entry point. The cost of acquisition is lower for one unit than it is when you’re buying many units. So, it’s easier to test the market and you can also keep your risk lower. It’s also easier to find distressed opportunities when you’re shopping for single family residential homes. These are properties that may need work to bring them up to market condition and maximize their rent. Maybe they went through foreclosure or they are in the short sale process.
Risk is concentrated in one area with multi-family properties. Rental pricing is also somewhat easier to determine because competition is really apples to apples. Most apartments are the same size, and you can easily compare the amenities that come with different apartment projects. With single family homes, each property is very unique, so it takes more effort to figure out how to balance the amenities or lack thereof when setting rent.
There are economies of scale that relate to costs when you have multi-family properties. There’s only one location, so vendors can price coming to only one place as opposed to going to many different houses. If the property is large enough, you might want a full time on site maintenance supervisor.
The econoIs It Better to Invest in Single Family or Multi-Family? Professional Property Management Advice in Indianapolis, INmy of scale in a multi-family home can lead to higher returns, but you need to compare the returns with the cost of entry.
If we can help you when you’re deciding whether to buy single family properties or multi-family properties, please contact us at ES Property Management in Indianapolis.