When it comes to investment properties, many are torn between investing in a single-family residence (SFR) or multifamily (MF) rental properties. While both choices provide great returns, each one suits a particular financial situation. It is wise for property investors to know which one is best before jump into the property development industry.
In Birmingham, Alabama, there is a large focus on real estate as the demand for higher quality residences rises. It is an opportune time for investors to make the most of this by investing in new developments. Before doing so, though, it’s important to decide whether to buy an SF or an MF property. Here is a quick guide on choosing which of the options is the most ideal solution:
One of the first things investors have to take into account is how to make the most of the potential profits the property can give. MF units, in this case, provide better chances of return because one still earns rent income even if one of the units is not occupied. SF residential owners, on the other hand, have the benefit of short vacancy periods, as many small families prefer this type of residence.
Apart from the initial purchasing costs, one has to consider the running costs as well. It is much easier to maintain an SF property, but if the investor is able to hire a residential manager, maintaining MF units will be easier, too.
MF property owners have a broader selection of tenants as they are not stuck with one. Plus, unit rental cost is usually lower, increasing the target market base. These owners, however, have to establish a good relationship with all tenants, compared to SF holders who just have to deal with one.
Often, SF homes are easier to resell than MF ones. Still, it depends on how well the investor has managed the property. Tenant relationship also comes into play here, as owners do not have to consider reselling when they have a good relationship with the tenants.
In the end, both types of property investments have their benefits and drawbacks. Investors must choose carefully between the two.
References: http://www.birminghamincomeproperty.com/revitalization/ http://www.investopedia.com/articles/mortgages-real-estate/08/buy-rentalproperty.asp