Owning single family rentals is an excellent way to supplement your income every month, while keeping your property management responsibilities relatively low. Here we dissect the pros and cons of single family rentals.
There are numerous advantages of why most real estate investors include single family rentals as part of their portfolio. If you are able to purchase and rehab a property then rent it out you are able to cut down on differed maintenance costs, have happier tenants because everything is new and also add in value/equity for refinance or resale purposes down the road. People want to live in a house, not a big multi complex (unless very nice and great area) and usually not even a 2 family. They do live there because it’s inexpensive, but turnover is higher because of close neighbors, noise, privacy etc. People want to live in a house, and there is a huge market for people wanting to rent a house. So, people that find a good house to rent will stay there if it’s a nice home creating fewer turnovers. Let’s face it, moving is a hassle for everyone! Therefore a single family house is easier to convert a tenant in to a buyer at the end of their lease. If you do decide to have single family rentals in your portfolio most investors are generally looking for $250+ cash flow per house after PITI payment, management and reserves.
- Tenants usually stay longer in single family homes, thus making for a lower turnover rate and a more reliable and steady stream of income. Not uncommon for someone to stay 5, 10, or even 20 years
- Better exit strategy for a single family property as opposed to a multi-family
- Single family homes attract a larger buyer base for resale
- More upkeep (front yards, back yards, fencing, landscaping, etc.)
- Everything isn’t all under one roof as with a multi-family investment property
- If a tenant moves out then you have a 100% vacancy rate
“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”