If you have money to invest, you should consider single-family rentals. Even if you only have a small amount to invest, it’s worth looking into investing in real estate. It’s a great way to leverage your home and invest in something much more significant than other assets like stocks would allow.
If you haven’t thought about investing in single-family homes yet, here’s why you’ll want to consider it.
What Are Single-Family Rentals?
Single-family rentals are detached homes for a ‘single family.’ You find them in most suburbs and in many sizes. A single-family home can be a ranch (single story) or multiple story home. It may be on a small lot or have a lot of land. All single-family homes make great rental options if you’re looking to invest in real estate.
When you invest in single-family properties, you buy a home and rent it out to families who can’t or don’t want to own a home. You invest your money in the home and then earn cash flow from the rent charged, plus you earn the appreciation from the home’s value.
The Benefits of Single-Family Rentals
Investing in single-family homes has many benefits, including:
You can charge higher rents than you would charge for a condo, apartment, or townhome. The more rent you can charge, the more cash flow you’ll earn.
Rents increase with inflation. You can charge higher rents through the years, increasing your cash flow the longer you own the property.
Single-family homes appreciate faster than multi-family properties. Since you own the property, you earn appreciation. The more the home is worth, the more profit you make.
You can leverage your equity. As you earn equity in the home (between appreciation and paying down the mortgage), you can leverage the equity, using it to buy more real estate investment properties.
Single-family renters are often more responsible than apartment dwellers. Your pool of renters will be of higher quality, which can mean a lower risk of default.
Single-family homes are a stable investment. Even if the market tanks, single-family homes often hold their value.
Single-family renters often rent longer. Most people find stability in single-family homes and try to stay in them as long as they can. The lower turnover rates make it easier to keep your profits high without the work involved in finding new tenants.
You can invest in a much larger investment than the cash you have. When you use mortgage financing, you can invest in a more expensive home. For example, if you have $50,000 to invest, you may be able to buy a home worth $250,000, putting down just 20% of the home’s value and borrowing the rest.
Single-family homes provide a passive income. If you buy a rental property, rent it out, and hire a property management company to manage it, you sit back and enjoy the profits while the property management company does everything for you.
The Disadvantages Of Single-Family Rentals
With every positive, there are negatives, so it helps to understand the disadvantages of investing in single-family rentals:
Single-family homes have a higher sales price. If you’re comparing single-family homes to condos or townhomes, you’ll see the prices are higher. Although you can leverage your investment with a mortgage, you’ll still need a down payment for the home.
Lenders require high down payments on investments. When you buy a rental property, lenders usually want a 20 - 30% down payment which can be a hefty investment.
Single-family homes can be costly to fix. As the landlord, you’re responsible for all repairs and renovation on the home, which can cost more on a single-family home versus a smaller condo or townhome.
Reasons Renters Like Single-Family Rentals
Renters often look for single-family homes versus townhomes or condos. Here’s why:
More space - Single-family homes have much more space than condos or townhomes, both inside and out. Whether they want a yard or just more room for a larger family, they often look for single-family homes first.
More storage space - Let’s face it, we all have a lot of stuff. Families especially accumulate a lot of stuff that they can’t store in a townhome or condo. Renting a single-family home provides the room needed for storage.
Feels like home - Renters often have a hard time making a rental feel like ‘home.’ But a single-family property is easier to make cozy and personalized as if it’s their own.
A sense of community - Many families want the stability of a neighborhood and good schools for their children, which they often feel is easier obtained in a single-family home neighborhood.
More privacy - Most single-family homes have more privacy than multi-family homes, apartments, or condos.
Take Advantage Of A Hot Market And Low Interest Rates
If you’ve been thinking about taking advantage of single-family rental investments, now is a perfect time.
If you haven’t noticed yet, interest rates are lower than we’ve ever seen them. If you need to borrow money to buy real estate, you’re in a great position today. Investing in debt is much safer than investing in equities, and with the low rates today, it will cost you even less.
Low interest rates are a great way to keep your fees and payments down, which means high profits from the rent you collect. Before interest rates go back up, it’s a great time to invest in real estate.
The real estate market is also hot right now. Homes aren’t staying on the market for long because the market to buy is in such high demand. Fortunately, there is an easy way to find single-family rentals.
The Best Way To Find Single-Family Rentals
It may feel impossible to find single-family rentals today, especially with the ‘hot housing market’ that we are experiencing, but there’s one place that makes it easy - Roofstock Marketplace.
Roofstock is a marketplace that brings together investors and buyers. The homes listed are great for first-time or subsequent investors, and they come outfitted with tenants. This means you earn cash flow right away rather than waiting to find tenants.
Roofstock Marketplace is easy to use whether you’re an experienced investor or are just starting out. Here’s how it works:
Sign up for a Free Roofstock Marketplace Account
It’s easy to sign up, and it takes only a few minutes. Once you have an account, you’re free to browse the available homes.
You don’t have to bid on the properties you find or even have an interest in them. If you just look through the available listings, you can get an idea of what you like and don’t like, so when you’re ready to buy a home, you’ll be well-informed.
Analyze the Properties
When you’re ready to invest, you’ll want to analyze the available properties. Luckily, Roofstock Marketplace makes it easy with the vast amount of information they offer, including pictures, videos, financial information, and lease information.
Decide if You Want to Hire a Property Management Service
If you want a true passive income investment, hiring a property management service will do the trick. Roofstock can match you with a property management service before you place a bid, so you know what your bottom line is before bidding.
Find a Property
After evaluating your options, you can place your bid right on Roofstock. You can conduct the entire transaction through them, and it’s free until a seller accepts your offer.
Just like when you bid on a property, the seller can counter your offer or even deny it. You and the seller can go back and forth until you reach an agreement. Once your offer is accepted, you’ll pay Roofstock a 0.5% fee. It’s always a good idea to include a real estate attorney in your decisions.
Close on the Sale
Once you line up financing and can close on the loan, you take possession of the home and become an instant landlord. If the home has tenants, you start earning rents right away.
Who Should Use Roofstock To Find Single-Family Rentals?
Roofstock Marketplace is great for any real estate investor interested in investing in turnkey property already outfitted with tenants.
It’s easy to find the properties you want and have all the research done for you. Roofstock even crunches the numbers for you, so all you have to do is read the analytics and decide if it’s a good investment for you.
It doesn’t get much easier.
Roofstock is excellent for beginning investors who want to jump in head-first and be a landlord. Roofstock will hold your hand throughout the entire transaction and even match you up with property management services to help you be a landlord.
It’s also great for existing investors who want to add to their portfolio. If you’re looking to branch out and invest long distance, Roofstock Marketplace is the perfect option. You’ll see the many investment options available across the country.
You don’t even have to see the properties yourself. Roofstock provides 3-D picture and video tours that make you feel like you’re on the property yourself. The key is to find a property in the price range you can afford and the features you think renters in the area want. Since most homes have renters in them ready, the hard work is done for you.
Why You Should Invest In Single-Family Homes Today
Investing in single-family rentals is one of the most stable investments you can make. It’s a great way to diversify your portfolio or start a new portfolio. With interest rates low and the real estate market remaining hot, it’s a great time to jump in and help renters have a great place to live.
Whether you manage the property yourself or hire a company to do it for you, there are plenty of profits available in the real estate market today. Are you ready to take advantage?
Check out Roofstock Marketplace today.
Read more about Roofstock: Roofstock Review
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