Multifamily offers economies of scale in multiple aspects such as physical structures, portfolio growth, operational efficiencies to name a few and reduces the risk that is inherent in single family investing.

Physical Structures: Typically each multifamily building will have multiple housing units. For instance, a 100 unit community might be comprised of 10 – 14 buildings with each building having 8-12 units in them. So 100 unit complex will have to deal with 10 roofs instead of 100 roofs in case of 100 single family homes. So the cost per each housing unit will be comparatively lower than a similar SFR. Other such examples could be Landscaping, amenities, parking and sidewalks, HVACs (In older properties)

Portfolio Growth: The amount of work needed to build a 100 SFR portfolio would entail 100 transactions( loans, appraisals, closings etc.) whereas a 100 unit apartment property is only one transaction. Moreover, The amount of work needed to close on a 100 unit property is similar to that needed for a 200 unit or a 400 unit property, which is a significant benefit for growing the portfolio.

Operational Efficiencies: Having all the rental units concentrated in one place greatly helps in a simplified property management structure. In the above instance, one maintenance crew can address repairs and/or any other maintenance items related to all 100 units. Where as we might need multiple maintenance guys in different locations if we have a 100 SFR portfolio. Moreover we would need only one insurance policy, one property tax account, one set of utilities/services (water, sewer, electricity, landscaping etc..) which are shared by all the 100 units versus having 100 sets of these items to deal with for SFRs.

Reduction in Risk: Since apartment communities have multiple housing units in them the risks inherent with being a landlord are spread across multiple units. For instance, if you own a single family home and the tenant moves out, the loss of income due to vacancy is 100%. This risk is diluted in apartments because there are multiple other units that still generate income.

There are many other such benefits that make owning apartments much more profitable than owning single family investments. Moreover apartments are lot more recession resistant than other asset sub classes in the commercial real estate space such as industrial, retail, hospitality, office buildings etc.