Residential property can yield a good return in the medium to long term, although it is not a sure fire way to make a quick buck with flipping. It also gives that comfortable feeling of being able to see and touch our investment. Whereas not being able to is hardly comfort zone in a volatile stock market.
We are often asked which is better: single residential or multi-family properties. While the answer, in the final analysis depends on you and your overall wealth strategy, there are some factors to take in before you finally decide.
Multi-Family Properties Can be Easier to Finance
A mortgage lender or financier may be keener to lend a larger amount for a small apartment complex than a single family home. This is understandable when you factor in the lower risk of defaulting payments, since these buildings generate a steady cash flow every month with good tenants.
Moreover, if one out of six units is vacant for a while, then you still have income from the other five. Whereas when a single residential home is vacant you have no income at all.
Multi-Family Properties Can be Easier to Purchase
If we wanted to, say own eight accommodation units we could acquire them as a lot by purchasing an eight-apartment complex. We deal with one seller, one lender, and one finance approval process. Whereas with eight single residential homes, we would have to deal with eight of each.
Multi-Family Properties Are Much Easier to Sell
Student debt and the lagging Calgary economy keep the rental markets buoyant because new tenants enter the market every year. Hence, if you purchase wisely you may find it easier to offload a multi-family unit than an equivalent number of single residential ones. You also only have to deal with one buyer and one lender too.
However Life is Seldom as Simple As it Looks
Carefully-chosen single home tenants may be willing to take an interest in a house and its surrounds. Whereas apartment dwellers seldom feel the slightest responsibility for what happens outside their front doors. Managing a small apartment block or condo can rob of us of precious time.
Investing in a multi-family building can put our entire investment portfolio at risk, while single residential properties decentralize it. Hence the first step towards a wise property investment is often finding a property broker you can trust