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Single-Family Vs Multifamily Investing (Which is Better?)

“The secret of getting ahead is getting started.” — Mark Twain

Are you a new investor considering real estate? 

Are you wondering whether you should buy houses or passively invest in multi-family deals? 

Or maybe you are already invested in some single-family rental homes, and you have wondered if you should get into multi-family investing?

These are great questions to ask! 

Most people think that the way that they are going to become financially free is through single-family real estate. 

I thought this way! Back in the day, I had four single-family homes. 

The idea was to retire with the “passive income,” of owning a portfolio of homes.

But then I realized… owning homes is a lot of work! 

I had this grand plan of getting 30 single-family homes to live off of. But then my cousin told me about the truly passive nature of multi-family syndication. 

And then he did it one better. He told me that you can get great returns for as little as a $50K investment. 

Let me tell you… 

I’ve never turned back!

Problems with Single-Family Rentals

The amount of work

The first and biggest issue with single-family rentals is that they are way too much work

Even simpler turnkey properties! 

You will often have calls every day or week, problems with tenants, and other random issues with the property that spring up. 

If you don’t have a property manager, it will be even more time. Fixing issues with the property, hiring contractors, dealing with tenants, etc. 

All of these things take up your time. And wasn’t the whole point of getting into real estate to free up your time? 

It is not scalable 

All of this adds up to the fact that single-family rentals are not scalable

You can’t endlessly find more properties to add to your portfolio. Every new property that you add takes away a good chunk of your time. 

Even with a property manager, there is a limit to the time you can put in. 

And if you are a highly paid professional, this is a waste of your valuable time. 

Doesn’t generate enough income

On top of the time aspects, single-family rentals don’t generate the kind of cash flow that you would want for passive investing. 

Often you just break even or only have a profit of around $300-500 a month.

But don’t forget all the work you are having to put in to get that money! 

I have a friend who owns a single-family rental and has it completely paid off. He’s making about 4-5% on his initial cash investment. 

Now, you’d think in comparison to the stock market that 4-5% is great. 

But it’s not! Compared to the 10-20% that is typical of a multi-family deal, that’s terrible!

Even a bad average annual return for a multi-family deal is 8-12%.

Pros of Multi-family Investing

Truly Scalable 

After you are invested in a multi-family deal, there isn’t much that you need to do. 

You don’t need to take calls from the tenants or property manager. You don’t need to worry about the day-to-day work that needs to be done on the property. 

You can sit back, enjoy mai tais on the beach, and let the cash come in. 

I know someone that is invested passively in over 70 deals

Because the time commitment is so low, you can scale your investments as high as you wish

Higher Returns 

Typically, you can expect consistent, double-digit returns from multi-family deals.

That is amazing! 

Some single-family rentals can have similar returns to a multi-family deal, but you have to factor in all the time you have to put into it. 

Your time is extremely valuable

If you are getting similar or lesser returns from your single-family investment, you have to factor in how much money your time is worth. Do the math, and I promise it is not worth it.  

Big Tax Advantages 

This is one of my favorite benefits of multi-family syndications! 

The income that is generated from your multi-family investment has amazing tax advantages.

Multi-family deals allow you to deduct or defer the income to a later date. This is amazing!

Doing this saves you even more money in the long run! 

Lower Risk than Single-Family Rentals 

Something that people don’t realize is that multi-family deals are a much safer investment

Let’s flashback to the worst part of the recession in 2009. 

The default rate for single-family homes was 4%, whereas in the multifamily it was .4%. 

That makes a huge difference in the ROI and the overall security of the investment! 

Looking at this, you can see why I encourage everyone to explore investing in multi-family deals. 

People often think single-family rentals will make them financially free, but it’s through multi-family deals that financial freedom is actually possible.  

Multi-family syndication allows you to take a step back after you invest, and let the money come to you. 

The hardest part is getting started. 

But lucky for you, I am here to help!

Check out our special report about investing. It compares the stock market to real estate, and it also includes how the pandemic affects your investment future. 

If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.

Bronson Hill

Bronson used to work as a consultant for a medical device company but switched to investing in apartment buildings to make his money work for him. He started with a single rental property that made good money and, after some advice from a family member, moved into bigger real estate projects. Now, he's all about helping others get into this kind of investment to earn money without having to work all the time. When he's not dealing with investments, Bronson loves to travel, write songs, stay active, and help fight modern slavery through his work with Dressember. He believes in working smarter, not harder, and wants to share how that's possible with everyone.

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