Investing in Alhambra is a great idea, and there are plenty of opportunities in the residential real estate market. You’ll find there are single-family homes in established neighborhoods as well as newer, HOA neighborhoods, and multi-family buildings that have two, five, or even more than 100 units.
Are you wondering whether you should invest in a single-family rental home or a multi-family unit?
Deciding which type of investment is best for you depends on several factors. Today, we’re providing four things to think about.
Think About Your Investment Goals
First, you’ll have to consider why you’re investing in rental real estate and what you’re hoping to gain. For example, if cash flow is your main objective, you’ll probably do better with a multi-family investment property that already has tenants in place who are reliable, have strong lease agreements, and are likely to stay in place for the long term. This will allow you to maximize your rental income every month.
However, if appreciation is really what you’re after and you’re looking for a property that you plan to hold onto for 10 or 20 years, consider a single-family home. If you own a well-maintained property and keep up with the updates and upgrades that reflect market demand, you’ll have high occupancy levels and you’ll watch the value of your investment increase over time.
Think About Vacancy Risk
You’ll also have to consider your tolerance for risk. In the current Alhambra rental market, vacancy isn’t a huge problem for investors. Good tenants are plentiful, and attractive properties in desirable neighborhoods are being rented quickly.
But, vacancies do occur, and we’re not sure what an extended pandemic is going to do to the rental market as we transition into 2021.
Tenants move out, and when they do, you’ll be faced with vacancy and turnover costs. A multi-family property will help you manage that risk better than a single-family home. When you invest in one single residence, all of your income relies on the tenants in that one property. But when you have a duplex, you have two income streams. If one tenant moves out, you’re still earning something. If you have a six-unit building or a 10-unit building, there’s even less of a risk that you’ll be hurt financially when a tenant moves out. This is a good argument in favor of multi-family homes.
Think About Your Tenant Pool
Many of the most qualified long-term tenants will be looking for single-family homes. It’s simply the economics of what today’s renters are seeking. They want to care for and maintain a home that has a yard, a garage, and is in a good school district. They’re usually willing to pay higher rent for a great neighborhood and additional things like a community swimming pool or an easy commute to work.
This is a good reason to buy a single-family home; you’ll always have high quality tenants interested in your property, especially if its location and condition are enviable. You can charge the most rent and be as selective as you want with your rental criteria.
Think About Per-Unit Maintenance Costs
You also have to consider the costs involving maintenance and repairs. Typically, single-family homes will cost more to maintain. When you have a building or a selection of multi-family units, you can have all the preventative work and the service checks and the inspections done at the same time. This will save you in the long term. Vendors won’t have to run to different parts of the city to get to all your properties; they’re in the same place.
If you’d like some help examining the rental properties available in Alhambra, please contact us at ZenPro Property Management. We can help you talk through your options and provide some data specific to your target location that might help you decide.