Why Single Family Homes are a Perfect Investment

family homesNew to real estate investing and not sure where to begin? May we suggest the house next door?

OK, maybe not that exact house, but one of the many single family homes that are for sale in your neighborhood.

There are a number of reasons why this type of residential investment is the perfect choice for anyone who’s just getting started in the real estate world. Here are four such reasons:

1. Longer Leases

People who want to rent single family homes are usually, well, single families. Maybe they are moving to a new town or city and want to get their bearings before they decide on a home to purchase. Or maybe they’re simply not ready yet, financially speaking, to put get a mortgage and come up with a down payment.

Either way, they will probably want to remain in their rented home for longer than singles or couples who rent an apartment. Their kids might be enrolled in the local schools, and after all, it’s not easy to pack up an entire household’s worth of stuff every year.

A longer lease for you as the homeowner/landlord means less hassle having to find and vet new tenants on a yearly basis.

2. Rent To Own

In some instances, you may want to consider negotiating a “rent to own” agreement with your tenants. Some landlords wait until after the first year to do this, to find out if both parties are interested in continuing their business relationship.

If the rent-to-own deal does work out, it can be beneficial to everyone involved. The tenants don’t have to move, and they remain in a place that’s become their home. They may be willing to pay a little more for that convenience.

For the landlord, this transaction means a relatively easy sale, without the trouble of listing the home, holding open houses, dealing with real estate agents, and evaluating offers. The turnover is practically seamless.

3. Higher Resale Value

Chances are that tenants of a rented single family home will take better care of it than shorter-term apartment dwellers tend to do. That’s because they see it as their home, even though they’re renting.

A single family home in a nice neighborhood is generally going to have a higher resale value, and be easier to sell in the first place, than a multi-family dwelling or apartment complex.

4. Reduced Operating Expenses

Renting single family homes can save you both time and money as an investor/landlord. If you own a larger apartment building, you may need an employee on site — a super or building manager who can oversee day-to-day repairs and other issues.

With single family homes, however, you can work directly with the tenants to take care of issues as they arise. There are going to be a lot fewer of these issues with only one unit, as opposed to a property that hold four, six, 12, or more units.

If you are handy, you may even be able to do the repairs yourself, saving you extra outlays of cash.

Have You Invested in Single Family Homes Before?

If so, do you have any tips you’d like to pass on to other new investors? Or, if you are a new investor debating between a single family home and some other type of real estate, what are some questions you have?

Start a conversation in the comments! We’d love to hear your thoughts.