You must have heard the old advertising phrase about “doubling your pleasure?” Perhaps you also forgot who are the ad was for. I had to look it up (Doublemint Gum, for the record). But the subject here is something akin to that: whether you as a real estate investor (perhaps uninterested in chewing gum) might prefer a duplex or even more rental units over a single-family home?
You can make make retirement income on either option, of course.
And you might think the obvious: more money to be made in a multple unit, right?
But when should you consider one over the other…if you have the choice? And why might you want to stick to single-family investments?
As I have said many times, if you are just starting out as a real estate investor, a single-family home is the easiest and most certainly best way to start. It’s simpler. Without the potential headaches of multi-family. And you can learn from your mistakes.
Of course, with single-family you only have one renter to rely on (or at times to simply placate).
The duplex’s main obvious advantage is that you can live in one unit and rent out the other. The investment often goes a long way towards paying your own living costs (and maybe even make a profit, of course).
A duplex also reduces your risk because if your single-family tenant moves out, you might have a period of time when the home is unrented (lost income is about as bad as it can get for landlords).
Another advantage of multiple units is that property management is sometimes easier because everything is right there in a single trip. Only one roof, one set of gutters and one basement (if it has one).
When selling, multi has the advantage of being offered to both users or investors, offering dual marketing chances. But on the other hand, they’re often harder to sell.
If you’re still inclined to take the money in multiples, consider this:
Utility costs can be far less for single-family since some multi-unit properties require the landlord to cover all costs such as water and trash. This depends but it is something that needs checking.
Parking situations are always easier with single-family where most homes have driveways or even garages.
Many tenants’ preferences are for single-family without neighbor’s right next to them. This helps make it easier to rent out your property, of course
Single-family generally requires less of an investment, therefore less risk.
They also don’t have as many maintenance issues.
And they often require less of your valuable time and attention.
So mjuch of this depends on what kind of landlord you want to be and your particular preferences and tastes. And just how hands-on you want to be.
But just keep in mind that doubling your pleasure may work when you chew Doublemint, but not necessarily in real estate investments.