Single-Tenant Vs. Multi-Tenant Properties

Single vs Multi-Tenant propertiesWhen looking to invest in commercial property, one decision you may face is choosing between single-tenant and multi-tenant properties. You’ll want to consider if one decision is better than the other. The answer depends on what your needs are and how much effort you’re willing to put into the property.

Cash Flow of Single Tenant Properties 

Single-tenantproperties consist of retail stores, warehouses, manufacturing, and restaurants, just to name a few commercial properties. The largest benefit to single-tenant properties is the consistency of cash flow. Once a credit-worthy tenant signs the lease, there is a strong chance that rent will be paid consistently. Having a tenant with a long-term guaranteed lease also means low or no vacancy. However, it also means that if your one tenant leaves, then you will forgo income until you find another tenant. You will have to recover the debt on the property including the mortgage, taxes, and extra expenses. 

Pros and Cons of Multi-Tenant Properties

Multi-tenant properties, like apartment complexes, flex space properties, industrial warehouses, and office centers, offer tenant and cash flow security. It’s rare for a property to be completely vacant, and if there is a vacancy you still have the luxury of other tenants to pay rent and support your income. Multiple tenants do introduce some uncertainty due to gaps between one tenant and the next and make predicting long-term income more difficult.  

The biggest drawback to multi-tenant properties is property maintenance. With many leases, the landlord is responsible for the maintenance of all common areas, lighting, HVAC, plumbing, lawn care, and any other repairs for the property. Multi-tenant properties require more hands-on work but hiring a property manager can reduce your headaches. A property manager will handle the inconvenient and time-consuming repairs as well as collect rent. 

At Ullian Realty we understand the nuances between single and multi-tenant properties. Our real estate brokers will take time to listen to your long-term investment goals and help you determine the best properties for your portfolio. Contact us today to view our properties.