The world of real estate investment is chock-full of various choices and options that can feel both exciting and overwhelming at the same time. Understanding these is an essential step in making the best possible investment decisions for you.

For individual investors, rental properties offer a great chance for long-term, income-producing opportunities. A large number of millennials have been delaying home ownership due to both student debt and a desire for mobility, creating a growing demand for rental properties.

If you’re looking to invest in rental properties, you might be tempted to go the route of a multi-family property. On paper, this makes sense; they’re big and they offer multiple cash-flows. However, single-family rentals ultimately represent a unique opportunity as well.

As a real estate investor, you are more likely already familiar with multi-family rentals. Here are a few reasons why you should consider single-family rentals as an option as well:

Higher cash flow

The average annual return for single-family rentals is between 9-10 percent, but that number is much higher in certain markets. Generally speaking, returns are more modest in markets where housing prices are already high. When investing right, these types of rentals can provide better returns than their multi-family counterparts due to a lower initial investment and higher rent. They also tend to experience less tenant turnover, which represents significant cost-savings.

Greater flexibility over investment property portfolio growth

By acquiring single-family rental homes gradually over time, investors are afforded far more flexibility in how they ultimately choose to grow their real estate holdings. Take a look, for example, at the many up-front costs that come with multi-family apartment units.  

Costs can be lower

Single-family rental tenants generally pay all utilities, which means significant savings. Expenses for repairs and improvements on single-family rentals also tend to cost a lot less than for multi-family properties. Let’s say that you own several single-family rental properties, they most likely won’t all need a new roof at the same time.

Easier to sell

Considering that these are rental properties, the day will come when you will decide to re-sell the property. Ultimately, a single-family rental can be marketed to more buyers than a multi-family building. Since they appeal to both investors and owner-occupiers, selling them will be a lot easier to accomplish.