A multi-unit design, meaning a duplex, apartment building or other residential building with more than one rental unit, can offer a landlord very distinct advantages over single rental homes. These may be a more expensive investment, and each unit may collect a lower rent amount, but in many cases they can be the most cost-effective purchase. They may earn a landlord more money overall. Note a few reasons to choose a multi-unit development versus investing in rental homes.
1. Maintenance outside the building
If you own four rental houses, you may need to pay a landscaping company to mow four lawns and clear the snow from four driveways. You also need to make repairs to four separate roofs, four separate driveways and footpaths, and so on. However, with a multi-unit design, you pay for the maintenance outside one building that still houses multiple tenants. You only have one roof to fix as necessary and one parking lot to patch rather than several driveways. This can mean lower maintenance costs for the outside of the building while collecting multiple rent checks from that one building.
2. Larger pool of potential renters
A rental home may appeal to a family as they need the extra space for children and are willing to pay the higher rental cost for those extra bedrooms and a backyard, but singles and retirees may not need all that space. However, an apartment building or other multi-unit design may give you a larger pool of potential renters. Couples may rent apartments, as might retirees, individuals living on their own or friends who are housemates. Apartments might also be rented by families with children. While rental homes may have a limited number of potential renters, apartments and other such multi-unit designs may have fewer vacancies just because there are more potential renters for those units.
3. Vacancy factor
With a multi-unit design, a tenant can move out but you are still earning rent from other tenants. With a single home, when the tenant moves out, the unit is completely vacant and you have no cash flow from your rental. If you cannot find a tenant for all the units in your multi-unit design, you can even consider moving into one of the units yourself while renting out the others. This will mean saving on the cost of your own mortgage while still earning an income from the occupied units. You cannot do this with a single family rental home.