Investment Property FAQ – Will Buy Single Story or Double Story Property as My Property Investment.

December 12th, 2023

When investing in a rental property, one of the key decisions is whether to purchase a single-story or double-story house. Empire 8 Property often receives questions from investors about which option makes more financial sense. While a multi-level home may seem more impressive, there are good reasons why a single-story house is typically the better investment choice.

Lower Construction Costs

The first major factor to consider is that building a two-story dwelling costs substantially more than constructing a single-level home. The additional materials, labor, stairs, and other elements ramp up expenses quickly. However, the extra rent you can charge for a double-story rental does not scale accordingly. There is little difference in the rental income potential between the two. With tighter profit margins, the double-story home is less likely to provide good returns.

Allows Reinvesting Sooner

Opting for a single-story rental also enables reinvesting the savings into your next property sooner. For example, spending an extra $80,000 on a multi-level house means waiting at least two more years before you have those funds available to purchase another income-generating asset. The single-story home allows expanding your portfolio more rapidly to increase cash flow.

Maximizing Land Value

Some investors consider double-story homes as a way to get more value from a small piece of land. However, the construction costs often outweigh any potential appreciation in property value from having a larger house. The money is better spent acquiring another affordable single-story rental that can start generating profits right away.

Key Takeaways:

  • Single-story rentals have lower construction expenses compared to minimal extra rental income potential from double-story homes.
  • Opting for a single-level house allows reinvesting the savings into additional properties sooner.
  • Trying to maximize land usage with a costly two-story home is often not the best investment decision.

The Bottom Line

When evaluating single-story versus double-story homes strictly as rental investments, the former is almost always the smarter choice. The lower building costs and ability to expand your portfolio faster make a sizable difference in long-term performance and profits. With sound financial fundamentals guiding decisions, investors can build wealth efficiently one single-story brick at a time.