Characteristics of multi-family houses
The purpose of a
multi-family house is to provide residential space for more than one family at a
time, with the most common multi-family households consisting of
grandparents, adult children and, in some cases, grandchildren under
one roof. However, a multi-family residential structure can also
signify a housing unit occupied by numerous inhabitants that are not
related at all, like an apartment building or flat. Condominiums and
duplexes are also prime examples of multi-family houses.
This is in contrast
with single-family homes, which are intended to be occupied by single
families or persons.
It is important to note
that multi-family houses are not always because of tradition or
tight-knit family values. Increasingly, this has become a way of
living due to economic reasons, with care-giving and care-sharing
also playing big roles.
In South Africa,
multi-generational living is a lofty 32.2% for three or more
generations living together. When you factor in the fact that about
37.2% of these groups are unemployed and only 19.2% employed, there
is no disputing the fact that economic pressure is the main drive
behind a lot of multi-family homes.
The pros and cons of
With benefits like
pooled resources and cost-efficiencies, multi-family homes are making
a lot of sense in today’s world. But when it comes to purchasing
property and you’re looking at multi-family structures, what
factors need to be taken into consideration?
One multi-family house/property equals one loan
and one bill to pay versus, for example, 20 separate loan processes
and bills to pay when it comes to multiple single-family houses.
One insurance policy is much easier to manage
than multiple policies.
It’s less emotional involvement for you, as
the owner, as it’s more about the numbers and less about the family
involved in a single-family house.
There’s less competition in purchasing than
those searching for single-family homes.
It costs more.
More management is required. Tenants in
multi-family units are often more transitional than single-family
homes and can result in shorter stay periods. They can also be harder
on the units as it often does not feel like home to them, which can
add to your maintenance and upkeep workload.
You might be up against smarter competition and
competing with investors who have more experience than the average
It’s more complicated – dealing with
multiple apartment units, people, families and issues versus one
single home with one family.
There can be fewer properties to pick from, or
there may be a lack of multi-family structures in your area.
as an investment
financial climate has a lot of people backing away from property
investments. However, there is more than one source citing the
importance of investing in multi-family residences as opposed to
single-family dwellings, with the following reasons enjoying the most
Although it costs a lot more to acquire an apartment building
than a single-family home, it can be easier to finance the former
than the latter. The reason for this is because a multi-family
property is more likely to generate income due to the number of
available units and spaces – and banks are aware of this. This is
true even when the property has a handful of vacancies or a few
tenants are late with their rent payments. Compare this with a
single-family house where, should the resident(s) move out, the house
would become 100% vacant and generate zero income.
Multi-family real estate is suitable for property investors
who wish to build a large portfolio of rental units. Buying a 20-unit
apartment building is a lot easier and quicker than purchasing 20
stand-alone houses. And with the latter option, one would need to
work with 20 different addresses, sellers, conduct inspections, etc.
This is easily avoided with one single structure offering numerous
residential space or units for multiple residents.
lot of real estate investors do not particularly enjoy the actual
management of their properties, instead choosing to hire a property
manager company to handle the daily operations regarding the rentals.
A property manager is usually paid a percentage of the monthly income
generated from a property. Many investors who own a handful of
single-family houses don’t make use of an external manager, as it
doesn’t make financial sense due to their small portfolio. The
amount of money that multi-family properties produce each month
presents the owner with room to take advantage of property management
services without the need to cut into their margins.
What may surprise a lot
of people is to learn that it’s generally more cost-effective to
buy an existing home than build one from scratch, as the pricing
between the two can differ by about 20% - 30%. Of course it all
depends on the building and location, but when it comes to duplexes,
apartments and similar multi-family structures, the costs can work
out to roughly R5,000 – R6,000/m²
Let homify help
Whether you’re on the
hunt for a spacious apartment, roomy duplex or your dream,
single-family home, homify is here to offer up tonnes of inspiration
with our ever-increasing range of housing examples, both locally and
abroad. In addition, we also offer a widespread collection of
professionals, from architects and interior designers to
kitchen planners and landscape designers, to help you conjure up the
house (or garden or any other space) of your needs.