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Multi-Family vs. Single Family Investing in Denver

Multi-Family vs. Single Family Investing in Denver

Investing in Denver is smart. This is a market that’s full of opportunities, and regardless of what you’re looking for in the residential real estate market, there are plenty of properties to choose from that will fit and elevate your investment portfolio. But, if you’re not sure what you’re looking for, it’s going to be hard to get started. In Denver, you’ll find there are all sorts of properties: single-family homes in established neighborhoods, new construction in gated communities, HOA neighborhoods, and multi-family buildings that have two, five, or even more than 100 units. Deciding which type of investment is best for you depends on several factors.

You Need to Prioritize Your Investment Goals

First, you’ll have to consider why you’re investing in Denver rental properties, and what you’re hoping to gain. For example, if cash flow is your main objective, you’ll probably do better with a multi-family investment property that already has tenants in place who are reliable, have strong lease agreements, and are likely to stay in place for the long term. This will allow you to maximize your rental income every month. Or, maybe you’re more interested in appreciation for your investment portfolio. If that’s your main goal and you’re seeking a property that you plan to hold onto for 10 or 20 years, a single-family home may be the better option for you. If you can provide a well-maintained property and keep up with the updates and upgrades that reflect market demand, you’ll attract some great tenants, and the value of your investment property will increase steadily.

Measure Your Risk Tolerance

You’ll also have to consider your tolerance for risk. Denver rental properties are in high demand currently. In fact, statistics show that half of the residents in the metropolitan area rent their homes. It’s a great time to invest in Denver real estate and be a landlord. However, markets change all the time. You have to be prepared to face the ups and downs, the trends and the challenges. Vacancies are going to occur as well. You have to think about the turnover and vacancy costs associated with single-family and multi-family homes. A multi-family property will help you manage that vacancy risk and expense better than a single-family home. When you invest in one single residence, all of your income relies on the tenants in that one property. But when you have a duplex, you have two income streams. If one tenant moves out, you’re still earning something. If you have a six-unit building or a 10-unit building, there’s even less of a risk that you’ll be hurt financially when a tenant moves out. This is a good argument in favor of multi-family homes.

Rising Denver Population and Your Tenant Pool

Many of the tenants who are looking for long-term homes in good school districts are looking for a single-family rental property. It’s simply the demand. They want to live in a home that offers stability and a neighborhood. They want a yard and a place to park cars. They’re usually willing to pay more for a single-family home. The population in Denver is growing, however. Young professionals are especially rising as a class of tenants. They might be interested in multi-family units in walkable neighborhoods. This is something to consider when you’re deciding on the type of property you buy. Your tenant pool will likely be different. 

We’d be happy to help you decide on the best Denver investment property for your needs. Contact us at Walters & Company.