Apartment vs. House: Which Should You Consider Investing?

• Apartments provide steady rental income and lower maintenance responsibilities, thanks to shared building management, multiple tenants, and tax benefits. However, ongoing costs and tenant management can be challenging.

  
  

• Houses offer more control and long-term appreciation, especially due to land ownership and flexibility in renovations, but they require higher upfront investment and maintenance.

  
  

• Cash flow and risk vary based on strategy, with apartments offering more consistent monthly income while houses rely on a single tenant at a time. The best choice depends on your financial goals and how involved you want to be in property management

Pros of Investing in Apartments

More Units = More Income 

With apartments, you can earn from several tenants at once. And even if one unit is empty for a while, the rest can still generate income. In turn, that helps spread out your risk. You’re not putting your eggs all in one basket. That’s a huge reason why many of the investors we’ve worked with have chosen them.

Apartments Gain Value Over Time

In the right location, apartments tend to go up in value, especially in cities that keep growing. So, if you hold onto your property, there’s a good chance you’ll make a nice profit when it’s time to sell.

• Mortgage Interest Deduction: You can deduct your interest on loans for buying or improving the property. This can significantly reduce your taxable income. Also, if you refinance your mortgage, you may be able to deduct your new loan’s interest, too. Interest you pay on loans for big property improvements also can qualify for this deduction. So, if you make renovations or add amenities, you can get a write-off for that.

  
  

• Depreciation: The IRS allows you to depreciate your apartment building’s value (excluding land) over 27.5 years. This depreciation expense reduces your taxable income each year. And even if the property appreciates in market value, you can still claim depreciation deductions. This way, you can offset your income tax from your rental earnings.

  
  

• Property Tax Deduction: Property taxes you pay on your rental property are deductible. So, this opens up for you another avenue to reduce your taxable income. Even better, these deductions apply to both local and state property taxes–so, you get to benefit on both sides.

  
  

• Repairs and Maintenance: You can deduct ordinary repairs and maintenance, like fixing a leaky faucet or repainting, in the year you incur them. This deduction covers the routine expenses necessary for keeping the property in shape. Because of that, you don’t have to get penalized with extra taxes for just doing your job as a property owner.

Less Work (If You Own Just One Unit)

If you’re investing in a single apartment unit (instead of a whole building), you don’t have to worry about landscaping, roofs, or exterior repairs. The building management takes care of all that, which makes your role more hands-off.

Affordable Entry Point

Apartments usually cost less to buy than houses. That means it’s easier to start small, test the waters, and grow your investment portfolio without needing as much of a massive budget upfront.

Cons of Investing in Apartments

Like with any investment, apartments have their downsides too. Here are a few things you’ll want to watch out for.

Ongoing Costs Can Eat into Your Profits

Apartments often come with regular maintenance expenses, which cover items such as security, shared cleaning services, and upkeep of common areas. These are necessary, but if you don’t manage them well, they can slowly chip away at your earnings. We have seen too many landlords fail to make a budget. Don’t be one of them.

Tenant Management Challenges

Dealing with tenants can be time-consuming, particularly if you have multiple units or face issues like late payments, vacancies, or lease disputes. In fact, some people even say it’s like a full-time job (unless they get support handling it, of course). 

Pros of Investing in Houses

If you’re thinking long-term, a house might be a better fit. Here’s why:

The Land Adds Value

One of the biggest perks of owning a house is the land it sits on. Unlike an apartment, where you don’t own the land, houses come with real ground, and land tends to appreciate faster over time, especially in growing neighborhoods. 

You Can Attract Long-Term Tenants

Houses usually appeal to people who want to settle in for the long-term. So, you can enjoy having steady, stable cash flow throughout the years. Also, it means fewer move-outs and less turnover stress.

More Ways to Add Value

With a house, you can boost value in creative ways — turn the basement into a studio, add a deck, upgrade the kitchen, or improve the landscaping. These improvements can raise both the rent and resale price.

Higher Resale Flexibility

When it’s time to sell, houses tend to draw a wider range of buyers. For example, it can bring in homeowners, flippers, and even other investors. That gives you a better chance of selling at a solid price without waiting too long.

Cons of Investing in Houses

Now, as much as houses sound like a dream investment, they have their own downsides too. Let’s go over a few that matter.

They Cost More Upfront

Buying a house usually requires more money than apartments do, from the purchase price to closing costs and everything in between. We have found that for new investors, this higher entry point can be a barrier. So, that’s definitely something to keep in mind.

Vacancies Can Be Riskier

With apartments, you can own multiple units and still earn income if one unit becomes vacant. But with a single-family house, if your tenant moves out, your income effectively stops until the next one moves in

So which investment should you choose?

If cash flow is your main focus, apartments might have the upper hand, especially when you own more than one unit. The reason is simple: multiple tenants mean multiple rent payments, which can keep money coming in even if one unit sits empty for a while. 

Houses, on the other hand, usually bring in higher rent per unit, but you’re relying on just one tenant at a time. So, when it’s vacant, your income stops completely. That said, houses might give you more long-term value, while apartments can feel more reliable month to month. In the end, your cash flow depends not just on the property, but how you manage it.