The commercial real estate business has made a huge recovery from the big crash a few years ago. CRE investors are buying property, taking on rehab projects, flipping houses, and renting real estate to individuals, families, and businesses alike. However, when it comes to single family and multifamily rentals, there is a distinct line drawn between which one investors prefer. We are going to look at the differences between the two, in order to help you decide which is the better investment decision.

Single family homes bring in more money per unit than multifamily rentals

It seems like common sense that renting out a full house to tenants will bring in more money than a single apartment. For example, rent on an  average two-bedroom family home is between $2,000-$3,000 per month. That rental price goes up as you add on bedrooms and amenities. A two-bedroom apartment (on average) goes for between $900-$1,500. Those prices alone would indicate that there is more revenue to be made on single-family homes over multifamily rentals.

Multifamily rentals are about volume

One of the reasons the market is shifting to multifamily rentals is that there is more to be made by volume than with single family homes. One family will bring in one rent check on a house, but a duplex, triplex, or apartment complex brings in many times the rent per unit, which often exceeds the revenue generated by single-family rentals.

Multifamily rentals rarely have complete vacancies

When tenants move out of a single-family rental, that house is not generating any revenue until new tenants move in. That could be a period of days, weeks, or even months, depending on the market. By contrast, when a tenant moves out of a multifamily rental, the other occupied units are still generating revenue, which means your cash flow may go down slightly, but it doesn’t completely grind to a halt. The more units you have occupied, the more of a financial fallback you have, compared to a single-family home.

Multifamily rentals are just starting to take off

The single-family rental market is saturated right now, and investors have a tough time offering competitive rental prices without severely cutting into their own profits. People are just starting to get drawn to multifamily rentals for the convenience to work, school, and entertainment, and the low-maintenance upkeep. Multifamily rentals in locations that offer easy access to people’s needs, shopping, etc. can easily ask $1,200-$2,400 and still have a heavy draw of prospective tenants. The market is just starting to take off on multifamily rentals, and the demand doesn’t show any signs of slowing in the near future.