Single Family vs Multifamily – Cashflow & Vacancy
Investing in multifamily properties has several benefits over single-family homes. Multifamily properties, such as a duplex, triplex, or other multi-unit apartment building, means having two or more living units on the same property.
These properties allow the owner to supply housing to two or more residents, providing the owner with multiple streams of income.
Multifamily properties often produce higher cashflow while reducing the owner’s risk due to vacancy. These are two of the reasons savvy real estate investors select multifamily over single-family homes.
Multifamily real estate is like buying ketchup (or peanut butter…yum) at Costco…when you buy in bulk, you typically get a discount. For example, you might spend $375,000 on a single-family home in Tacoma that generates $2,000 of rental income each month. OR you could spend $600,000 on a triplex that generates $1,400 per unit ($4,200 total) each month. The higher total rental income and lower cost per unit will help savvy investors generate more cashflow.
When you own a single-family home and your tenant moves out, that one vacancy means your property produces zero rental income. If you own a triplex and one of your tenants moves out, there are still two other tenants paying rent and the property continues to generate income.