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Is It Better to Invest in Single Family Rentals or Apartment Buildings?



One question I get asked a lot is, “Is it better to invest in single family rentals or multi-family properties?”

The truth is that there’s no perfect answer and so that's why you should invest in both, but for different reasons.

Here are some Pros and Cons:

Single Family Residences or (SFRs)

Pros

  • More affordable

  • Usually it’s easier to purchase a single family vs an apartment building because less capital is needed initially.

  • Good for slow steady growth

  • You could possibly buy one a year and in 10-15 years, have an amazing cash-flowing portfolio.

  • Liquid in pieces

  • If needed, you could sell off a single home for the cash and not lose your entire portfolio.

  • Easier to diversify

  • If you want to diversify, you can buy SFRs in different parts of the country, with different market characteristics.

Cons

  • Slower ability to scale

  • With multi-family properties you can buy a good number of units under one roof at once. With SFRs, it’s one house at a time.

  • Liquidity in full

  • It’s harder to sell all your assets quickly if needed. You’d have to either sell one by one, or as a portfolio which is harder to unload.

  • Market-dependent values