Single-Family vs. Multi-Family Investing: Which is More Profitable?
By Michelle Clardie on 09/18/2025.
Reviewed by Josefin Gatsby
While there isn’t publicly available data clearly comparing the profitability of single-family vs. multi-family investing over the same timeframe, long-term studies have found that single-family rentals tend to return around 8.5% per year on average, while multi-family apartments tend to return around 9.3% per year on average.
However, real estate investing is highly individualized, with returns ranging widely depending on factors like location, condition, and management. So, rather than declaring multi-family the clear winner in the single-family vs. multi-family debate, we want to take a closer look at which property type performs best in different categories. After all, investment goals are as unique as properties, and returns won’t mean much if they don’t align with your objectives regarding factors like budget, timeline, and exit strategy.
Let’s start with the benefits and challenges of single-family investing, then move on to multi-family. Toward the end of the article, we’ll discuss how to choose the right option for you, and explore the best way to start investing in either model.
Benefits of Investing in Single-Family vs. Multi-Family
Investing in single-family can provide a few benefits over investing in multi-family, including:
Lower barriers to entry. Single-family homes are typically more affordable and easier to finance (through traditional conventional mortgage loans, for example). This is especially important for new real estate investorswho may not have the capital for larger multi-unit structures.
Potential for strong appreciation. There is some evidence that single-family homes appreciate faster than multi-family homes due to owner-occupants, who often pay premiums due to emotional connections to homes and neighborhoods.
Simpler management. With just one household to manage, it’s easier to handle landlord tasks like leasing and day-to-day operations. However, as a portfolio grows, this changes. Managing four single-family homes may be more difficult than managing a four-unit multi-family property because of the physical distance and differences in the units.
Less tenant turnover. Renters tend to stay in single-family homes longer than in apartments. Less turnover can mean lower expenses and less vacancy loss.
Easier exit. It’s easier to sell a single-family home because there is a larger buyer pool. Unlike multi-family properties, which are sold exclusively to investors, single-family investment properties may also be sold to homebuyers.
Challenges of Investing in Single-Family
There are a few potential downsides of single-family investing to consider as well, such as:
Vacancy risk. If you have only one unit in service, you lose 100% of your rental income during periods of vacancy.
Higher per-unit costs. Per-unit insurance, property taxes, and maintenance tend to be higher on single-family properties because you can’t spread the cost across multiple units.
Less scalability. Building a portfolio of single-family homes is more time-consuming and requires far more resources than acquiring multi-family properties. Plus, if you acquire multiple homes over time, maintenance and management are less efficient due to the distance between properties.
Benefits of Investing in Multi-Family vs. Single-Family
Now for the case for choosing multi-family investing over single-family.
Stronger cash flow potential. Multiple units generate higher gross income.
Economies of scale. Shared walls and systems, as well as centralized maintenance, lower per-unit costs. This also makes it easier to absorb professional property management costs, which can make your returns more passive.
Greater forced appreciation potential. While you can force appreciation by adding value to any property, it’s often easier to force appreciation with multi-family properties, in which the value is tied to net operating income (NOI). This means that raising rents or lowering expenses can significantly increase property value.
Diversified tenant risk. With multiple units, one vacancy can be offset by the income from the remaining occupied units. This increases income stability.
Faster scalability. Buying one multi-family property adds multiple rental units to your portfolio.
Challenges of Investing in Multi-Family
Of course, investing in multi-family properties also comes with a few challenges, including:
Higher purchase price and more complex financing. Buying a multi-unit building typically requires larger upfront capital, and if your property is more than four units, you’ll need commercial financing rather than simpler residential financing. While commercial financing may be more complex, terms can actually be favorable because the lender considers the property's performance as a key determining factor in setting the terms.
Competition with experienced investors. Larger deals often attract institutional buyers with deep pockets, which can make it harder to secure new properties on your own.
More intensive management. More tenants mean more maintenance requests, turnovers, and potential conflicts.
Regulatory exposure. Multi-family housing regulations can be stricter than single-family, potentially increasing litigation risk.
How to Choose Between Investing in Single-Family vs. Multi-Family
Both single-family and multi-family properties offer substantial benefits to investors. In addition to the property type-specific benefits listed above, both offer tax advantages, debt leverage, and inflation hedging. But if you’re trying to decide between the two, here are a few general guidelines to help you align your investment strategy with your current position and future goals.
Single-family investing typically works best when:
Your primary goal is market appreciation.
You don’t plan to acquire more units than you can manage yourself.
You want an asset that’s easier to resell.
Multi-family investing typically works best when:
Your primary goal is cash flow.
You want to scale your portfolio quickly.
You’re happy to outsource the day-to-day management to professionals.
The Best Way to Start Investing in Single-Family AND Multi-Family
Real estate syndication is growing in popularity as an alternative to direct property ownership. Syndication allows accredited investors to pool their funds with other investors for a specific real estate deal (which could be single-family, multi-family, or even commercial or industrial). This gives you access to properties you might not be able to find, afford, finance, or manage on your own.
With syndication, investors can enjoy all the benefits of real estate investing without the risk, expense, or hassle of direct ownership. Even better, with low minimum investment amounts, you could spread your capital across multiple hand-selected projects, instantly diversifying your portfolio and giving you a chance to invest in different property types!
Gatsby Investment, for example, offers expertly analyzed deals specifically chosen to take advantage of current market conditions. In 2025, going into 2026, Gatsby specializes in multi-family developments, built from the ground up in high-demand Los Angeles neighborhoods. Choose from quick, built-to-sell developments, or invest in long-term cash flow opportunities with built-to-rent developments.
Gatsby has also enjoyed success with single-family house flips under previous market conditions, and plans to offer these opportunities if markets shift favorably toward this investment type in the future.
Don’t limit yourself to investments that you can access, fund, and manage on your own. Explore Gatsby’s real estate syndication investment opportunities to leverage their expert market insights, proven development partners, and carefully curated opportunities to create a well-balanced portfolio!
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