Single Unit Investing and Multi Units Investing: A Comparison

Real estate is all about finding great deals and putting a lot of money in your pocket. There are people who have become extremely wealthy by single unit investing, and there are people who have made a lot of money flipping multi-unit houses. However, sometimes people get confused whether they should do single unit investing or multi units investing. The following comparison between single unit investing and multi units investing will certainly help you understand which can create more wealth for you at a faster rate. 

Cash Flow
When it comes to cash flow, multi units investing gets an edge over single unit investing. The cash flow is always greater in multi family than that of single-family houses. The biggest risk in having a single-family house is that when you lose your tenant, this put an instant brake on cash flow and you lose all your income. This is not the case with multi units investing. You do not have to face such risks if you do multi units investing. The reason is very simple. Let me give you an example. If you own three units or say apartments, and you lose one tenant, you still have two rents coming in to pay your expenses. The cash flow thus does not suffer that much. However, in single unit investing, sometimes, you can even lose your entire profit for the year. Therefore, you can easily minimize such risks by having more units under one roof. The more will be the units, the lesser will be the risk. Moreover, the bigger cash flow in multi units investing leads to certain other advantages as well. For example, to manage your tenants, you can hire management companies and thus, you not only can minimize the hassle but also since you do not need to have contacts with your tenants, you can wholesale, retail, pre-foreclosure, rehab, subject to and lease option apartment houses as well.

Maintenance
In multi-unit investing, you own many units under one roof, while in single-unit investing you own just one unit under one roof. The economies of scale depends upon how many units you have under one roof. The more will be the units the more will be the economies of scale in your favor. The reason is very simple. Let me give you an example. Suppose you do a single unit investing and you own five individual single-family houses. This means: you have to replace or repair five roofs; you have to maintain five lawns; and you have five tenants spread out through out your city or town. 

However, this is not the case with multi units investing. In multi unit buildings, all the five families are under one roof. This means: you just have one roof to repair or replace; you just have one lawn to maintain; and all your tenants are centrally located. Moreover, in multi units investing, you get a bigger group of tenants to get together and pool their money to pay for all the maintenance work for a building. Therefore, when it comes to economies of scale, multi units investing is certainly a better choice.

Competition
Most people have the belief that flipping single-family houses is easier than flipping multi family houses. After all, there are so many single-unit investing Gurus to teach you how to perform single unit flipping. However, there is no one out there to teach you how to perform multi units flipping. The reason is there is a much huge competition in single unit investing than there are in multi units investing. This is where multi-units investing gets an edge over single unit investing, and that is the reason why along with single family houses, smart investors put multi-units also in their portfolios. 

Selling the Property
A multi-unit apartment complex gains a better dollar amount of appreciation because it costs much more than single-family homes. Since in a multi-unit apartment, you own many units under one roof, say four family houses, it can earn you as much as three times more appreciation than that in a single-unit property in the same market. Thus, when it comes to selling your property, a multi-unit investing is more advantageous than single-unit investing.

No doubt, you can make a lot of money flipping single-family houses. Therefore, simple concentrating on some aspects of single-family houses may not earn you a big money. However, along with single-family houses, if you add multi-units also to your portfolio, it will create more wealth for you at a much faster rate.

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