How do you know if you should invest in a single-family rental home or a multi-family property? The Charleston market provides investors with both property types, and what you choose will depend on your investment goals, your comfort level when it comes to risk, and the market trends that are driving what tenants are currently looking for.
If you’re thinking about investing in Charleston real estate, but you’re not sure which type of property to focus on, we have some things for you to consider.
Market Factors: Charleston Real Estate
Interest rates have gone up and the real estate market frenzy may be slowing, but there’s still a lack of inventory on the real estate market in Charleston. If you want to have more options, you might consider multi-family investments. There are simply more of them.
Unless your investment goals include only one or the other type of property, be open to whatever comes up as you’re looking for the right rental property. If you were hoping to find a small apartment building, for example, but you find you’re priced out of that market, perhaps a duplex is a good place to start.
A single-family home is always a great investment option because they are always in demand among highly qualified tenants.
Here are some of the benefits to this type of property:
- The tenants you attract with a well-maintained single-family home in a good location will want stability, and they are likely to maintain the home just like it’s their own property. These tenants are often interested in owning a home, but they prefer to rent because they like the freedom and the low-maintenance lifestyle renting affords. Single-family homes appeal to tenants who want good school districts and proximity to commuter routes and shopping.
- These rental properties offer great appreciation potential. Values are always increasing at a rate that outpaces multi-family homes. The cost of a single-family investment home is extremely reasonable in Charleston, especially compared to other markets along the east coast.
- You can also count on high rental prices with single-family investments.
One of the challenges to owning single-family homes is that your maintenance costs may be higher. Even if your property is new or in good shape, you’ll probably spend a little more keeping it in excellent condition. There may be landscaping costs and HOA fees. Some of these things you can include in the rental amount. Others, you will have to pay yourself.
Multi-family properties in Charleston tend to be duplexes, triplexes, or even small apartment buildings. There are a couple of benefits to these investment types:
- When you invest in a multi-family property, you’ll have more than one tenant in place, which means you have more than one rental income stream. If one unit is vacant, you aren’t losing a lot of money quickly. You still have rental payments coming in from the other units.
- Economy of scale is another benefit to renting out a multi-family unit. When you need maintenance or landscaping services, you can contract with a vendor who is likely to provide a discount because of the volume of work you need. You’ll save time and money maintaining a single building with two or three units.
There may be more management needed when it comes to your tenants. In multi-family buildings, tenants are more than neighbors; they’re often sharing walls and communal space. Conflicts and disputes can arise between your tenants more frequently. There might be complaints about noise or parking or trash or pets. This can take some extra time and lead to frustration for you as the landlord.
If you’d like to explore which type of property would work best for your investment portfolio, please contact us at Charleston Home Rentals.