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3 Reasons Why You Should Be Investing in Single-Family Homes

3 Reasons Why You Should Be Investing in Single-Family Homes

In 2017, the average time to sell a typical home from start to finish was a mere 73 days. That's faster than the 2016 average of 81 days. Now, 2018 is shaping up to be even hotter.

With such a hot market, it's easy to invest. But it can be hard to know where to put your money.

Some experts advise putting your money towards multi-family homes. However, we think that investing in single-family homes is a better option. Let's look at why.

Why Should You Be Investing in Single Family Homes?

The point of investing is to make money, right? You also want to start earning a return on your investment as soon as possible. Buying and renting out single-family homes is a great way to do that.

With that said, real estate markets and trends vary depending on your location. You'll still want to study your market to determine the best investment strategy for you.

Let's look at 3 general reasons why investing in single-family homes is a good idea.

1. Higher Returns

Single-family homes often offer the benefit of higher returns. Again, the market in your area will have a huge impact on your return, but let's talk generalities.

The idea behind buying a multi-family home is that you get good economy-of-scale. In other words, your upfront price per unit should be lower.

But you have to factor in that multi-family units have a higher turnover rate. That means you'll spend more time looking for prospective tenants. Not only is that extra work for you, but there is also a higher chance that unit(s) will sit empty--thus not generating capital.

There are also usually higher maintenance costs for multi-family residences. Plus, if you're paying water, garbage, etc, that bill will be higher as well.

2. More Properties Available

At any given time there are usually more single-family homes on the market than multi-family ones. This gives you a real estate buffet that you can work with.

With more properties on the market, you have more choice and flexibility. Plus, you can usually get a better deal on the property since sellers are competing amongst themselves.

3. Easier to Buy

Single-family homes also tend to be easier to buy. Their abundance is only one reason why.

Because they are bigger, multi-family units tend to be more expensive than single-family homes. The lower price point means that you can start investing sooner. You won't need as much capital to get started.

Plus, what if you want to get a loan for the purchase? Not only is it easier to qualify for a loan for a single-family home but it's also cheaper.

Once you get over a certain number of units, you may have to take out a commercial loan. As you can imagine, the down payment and interest go up and things get more expensive.

Do Your Research

Whatever type of home you decide to invest in, be sure to do your research. While we feel that investing in single-family homes is the way to go, it may not be right for you in your market.

Take some time to study the market in your area and talk to industry experts. With a well-researched purchase, you'll be well on your way to great investment gains.

For more great real estate advice, be sure to check out the information on our blog.


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