Multiplexes vs. Single Family Rentals – Pro & Cons

When considering where to invest your money and how big is “too big” we suggest carefully weighing some of the following pros and cons.

The first pro for multiplexes may seem relatively straightforward, but consider that you have more rental units on potentially less land. This means more income per square foot than single-family rentals. One of the huge benefits to this from a cash flow stand point is that there is most likely going to be at least a few of the spaces rented so the hit isn’t quite so hard when one or even two tenants decide to move.

Secondly, when you consider that there are multiple rentals but basically one lawn to get mowed, one roof, and one basement. Overall having one large space can keep general maintenance, management and even accounting costs down. Essentially your business is in one location instead of spread out across 10-15 different locations all over town.

Conversely with single-family rentals (SFR’s) it is more common for tenants to assume some or even a majority of general yard and landscaping maintenance. Also the utilities in SFR’s are most often the tenant’s responsibility unlike in multi-rental units.

Depending on the area and the preferences of the tenants, it could be very likely that with SFR’s the tendency is for renters to stay longer. They are more likely to have families and pets and want to settle down. Many will pay higher rates for the privilege of having their own unit.

So it is important to know what area of Phoenix you want to buy in as well as what pros and cons are comfortable to you as an investor.