The decision to invest in property for rentals is a big one in itself and, more often than not, it
multiple-family housing unit? There are pros and cons for each scenario and some of the main
points in both cases are outlined below. However, before you delve into them it’s important
to remember that there is no clear-cut answer to this debate. It all depends on what’s more
readily available to you, depending on the area where you live, the budget and time you have
at your disposal, as well as your long-term plans. That being said, let’s take a look at some of
the reasons for and against single-family and multi-family housing units, respectively.
Single-family housing units for rentals
• They’re usually cheaper to buy and more profitable to sell, since their value in time
tends to appreciate faster than that of multi-family units.
• Should you decide to sell eventually, you will have an easier time reaching a broader
range of potential buyers.
• You only have to handle the complaints and requests of a single tenant at a time,
instead of several. This means you can skip the expense of hiring a Property Manager.
• In terms of cash flow, they rarely generate as much money as a multi-family housing
• Vacancies are also a bigger issue when you only have one tenant, since you can’t expect
to replace them immediately and will need to figure out a way to cover the home’s
• Rents on single-family units tend to run higher, which means you might have a harder
time finding tenants.
Multiple family housing units as rentals
• You have higher odds at a better cash flow, since you’re buying suites ‘in bulk’ – this
usually means the price per unit is smaller.
• Your running expenses, such as utilities, taxes, and so on, are covered by multiple
tenants at a time, which means you won’t have such a hard time navigating through
periods with vacancies.
• Property Managers are more affordable and a better investment with multi-family units
than with single-family units.
• Since there are more people living in the building at the same time, you’ll likely run
higher maintenance costs. Things tend to break down more often in such cases.
• Where there are several tenants, disputes are likely to ensue. They’re basically
• You’ll have a harder time selling a multiple family housing unit than a single-family one,
when it’s time to sell.
3 FAQs before buying a single-family unit
1. Can you cover the costs (utilities, taxes, insurance, mortgage) when the unit is vacant?
2. How will you approach your tenants’ issues? Will you handle them yourself, or can you
afford to pay a Property Manager for just one tenant?
3. Do you plan on selling the home fast, or are you going to hold on to it, in order to
ensure a monthly flow of revenue?
5 FAQs before buying a multi-family unit
1. How will you handle arguments and disputes between tenants? Do you have the time
and energy to take on these unavoidable challenges?
2. Have you considered hiring a professional Property Manager to deal with disputes
among tenants? Can you afford one?
3. Are the suites individually metered? If they’re not, how will you determine the ratio of
utility costs that each tenant should pay for?
4. Are the individual flats in your multiple housing unit legal? (Hint: Most of them are not)
5. Do you plan on legalizing the suites (which can be expensive) or are you ready to deal
with the authorities each time there’s a complaint against one of your tenants?