Practice English Speaking&Listening with: Single-Families vs. Multi-Families: Pros and Cons

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This is Ali. I get asked all the time about single-family investing versus

multi-family investing.

AndI haven't told you that I'm a complete PowerPoint nerd and I'll take

any excuse on the planet to

to do something in PowerPoint. So, here's a pros and cons weighing

of single-family versus multi-family. Purchase Price:

It's more advantageous for the multi-families. It is cheaper per unit due to the common areas,

the common walls, and all that.

Per unit, it will be cheaper, so multi-family wins.

Maintenance Cost: Similar reasonscommon walls, common areas,

per unit and everything's standard usually. You can get everything at a cheaper

price when you buy

in mass, and with the common walls you just don't havewell

as many single walls to fix. Location: This is location of the units.

It's more advantageous for multi-family because everything is

together in one building most likely. With single-family, it could be scattered all

over the place.

Maybe they're all in the same subdivision, but still

it's not the same building so the location's not as great over there.

Management: Still similar because everything is together.

Most likely with the multi-family, you have the same manager, same everything going on

for the property. Everything in the same walls. Management with the single-family: you can use a

single manager no problem, but he's going to be running around

probably all over the place. It's just not all

together in one batch, which includes the paperwork.

Multi-familyif you're talking more than 4 units or even less than that

probably everything's under the same company name. It's all going to fit better.


the single-families, everything is single deeds. Vacancies: Multi-families rock because

if one unit's empty, the income from another unit can make up for it. So no loss on

your side.

Whereas a single-family, if it's vacantwell,

it's vacant and you have no income. Returns:

These both get a star because it depends on the market you are buying in.

Make sure you are

up on the returns. Most people think that multi-families will always get higher

returns and that is not the case.

Oftentimes single-families will get higher returns than a multi-family.

By the time you pay way more on a multi-family to get lower returns than

single-family homes

it doesn't make a lot of sense. It depends on the market you are in. Look

at it carefully

Financing: They also both get stars. They both have different advantages.

Single-families, you can get traditional mortgages if you qualify. Those terms are


You cannot get cheaper interest rates or

just general terms on a loan than with a mortgage. Multi-family, however, if it's more

han 4 units you're talking about a commercial property,

which lets you get commercial loans. It's great if you don't qualify for a

mortgage, which

so many of us don't anymore. The bummer about that is the terms are usually more

expensive and not as advantageous,

but again, one loan is better than no loans.

Tenant Quality: This is often higher in single-families.

Typically in apartments, you're talking slightly lower income. Most people only live

in apartments because it's all they can afford, unless you're like me and live in Venice Beach.

No normal human can afford much out here.

Okwell, a lot can, but for the most part it's more

standard for people to live in multi-families out here

than it would besayin Atlanta or anywhere.

In general (it's not always true), tenant quality tends to be higher in the single

-families, which can contribute positively to your returns.

Tenant Turnover: Again, with the tenants, most people don't live in apartments

for the long haul. It's not their goal to end up in an in an apartment for the rest of their life,

so they tend to move out. You're going to get more transient tenants.

Single-family homesthey may stay in there forever. People do strive to live in a home,

and if they can't buy one

they may stay in your rental property forever. Single families are amazing for

Exit Strategy.

You can sell to primary homeowners, which is the best way to get the most

amount of money from a sale. Multi-familiesyou're going to be selling to an investor.

What to all of us investors want? A deal.

Fun: Last but not leastthey're both fun. That's really what matters at

the end of the day. They can both cause headaches or not cause headaches,

or put returns in your pockets or not put returns. So weigh it all out,

figure out your goals, try and get the highest returns, and have fun with it!


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