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Pros and Cons of Investing in Single-Family Homes

June 7, 2022

Pros and Cons of Investing in Single-Family Homes

As an investor, you have to decide on many different things, and one of the first ones is what type of property you want to invest in. It’s not a secret that investors and renters are always interested in single-family homes. However, investing in single-family homes has its pros and cons. Whether or not it’s the correct type of investment for you depends on your goals, how much risk you’re willing to take, and how much responsibility you want. To help you decide, we’ve consulted real estate and property management experts and found out what are the benefits and disadvantages of investing in a single-family home. You’ll find them further in this article. Hopefully, they’ll help you wage if this is the right way to go for you.

Is investing in single-family homes a good idea?

To be completely honest – there is no correct answer to this question. Whether or not to invest in a single-family home is a very subjective decision and depends on different personal factors. As the stakes are high, you need to thoroughly consider the pros and cons before making such a significant investment.

Caption: It’s much easier to rent a single-family home than a condo or an apartment. Alt-tag: A house for rent sign on the lawn in front of a single-family home Pros of investing in single-family homes

Here are the benefits of investing in a single-family home.

Single-family homes attract quality tenants

A single-family home is always a good investment because it is easy to find qualified people to rent it to. Unlike apartments or condos, many people rent single-family homes for a year or more. Most people who choose this type of housing are saving up to buy a home.

When you rent out a well-kept single-family home in a good area, you’ll likely get tenants who want stability and who will take care of the home like it’s their own. You can count on them to live there for more than a year, and they’ll take good care of the house.

Of course, this doesn’t mean you shouldn’t take precautionary measures and be careless when choosing your tenants. We always recommend professional tenant screening. That way, you’ll be sure you’re letting reliable and trustworthy people into your rental.

They’re easier to manage

Another advantage of buying a single-family home is that it is considerably easier to operate it than a multi-family one. It’s usually easy to find licensed real estate professionals to help you with all aspects of managing your property. The fees are far lower than you’d pay for a larger structure and multiple units. You also won’t have to deal with the headaches of hiring and managing employees.

Caption: It’s very easy to find a reputable and reliable property management company to take care of your investment property.

Alt-tag: Person in a suit holding a model of a single-family home

They bring high returns

Single-family houses are a terrific option if you’re seeking a stable return on your investment. You can expect a 12% annual return on your investment in most cases – a substantial sum of money! Remember that real estate investing isn’t about getting rich immediately; it’s about investing for the long term.

Single-family houses are an excellent choice if you plan to keep these properties indefinitely because they appreciate quickly over time. For example, if you buy a house today for $100,000 and sell it 20 years later for $200,000, you will have gained 12% every year. If you keep your investment property continuously, the value will continue to rise at this rate.

Cons of investing in single-family homes

Here are the downsides of investing in a single-family home.

Single-family homes come with higher vacancy risks

Unlike multi-family investing, which involves purchasing multiple units or “doors” to produce revenue, single-family investing entails purchasing only one apartment to rent. This means you’ll only have one source of rental income. You’ll be left without payment if the tenant falls behind on their rent or moves away unexpectedly. Bear in mind that, nowadays, moving is rather easy. You have many websites such as bestcrosscountrymovers.com that allow you to find a relocation professional quickly. So you shouldn’t be surprised by tenants going missing – there’s help waiting on every corner. This can be unsettling, particularly in a slow market where tenant competition is high. This may significantly cut into your ROI.

Higher resale value

Single-family homes usually have a good resale value no matter how old they are. Homes that have been fixed up before they are put on the market can sell for more than homes that need repairs when they are bought. It’s imperative to hire an experienced real estate agent to make the most of your purchase. They’ll help you understand the market and make a decision you won’t end up regretting.

In fact, professional help is crucial in life-changing adventures such as this one. For instance, let’s say you’re about to have an interstate move to California from a completely different part of the US. You wouldn’t dare to go on this adventure before you look for reliable assistance and hire the best California interstate movers around, right? When you’re investing in a single-family home, the principle is the same, but the stakes are much higher.

Investing in single-family homes doesn’t provide as much leverage

Lastly, keep in mind that buying a single-family home usually doesn’t give you as much leverage as buying a larger property. Leverage in real estate investing refers to borrowing money from others to support your investment. In single-family investing, for example, you might only be able to acquire a loan for 50% or 60% of the acquisition price. Investing in a larger property, on the other hand, may allow you to obtain a loan of up to 80% or even 90%.

Caption: Make sure to analyze your finances and determine if investing in single-family homes is a good way to go.

Alt-tag: A person with a phone and a pile of papers with charts on them

This is because investing in larger buildings entails spending more money, which entails taking on greater risk. And no bank wants to be held responsible for the entire risk if something goes wrong. As a result, they are more inclined to lend you money when you invest in a larger house. This means that if the value of your investment rises, you will make less money.

Will you be investing in single-family homes?

We hope this article helped you decide whether investing in single-family homes is something for you. It’s a big decision, so make sure to carefully consider all pros and cons before making a final decision. If you decide to invest in a single-family home, reach out to an experienced

property management team who will help you deal with all aspects of renting out your new property. You can sit back and enjoy your profits while knowing your property is in great hands.

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Is investing in single-family homes a good idea? To help you figure out if this is the right call for you, we’ve prepared some pros and cons.

Article courtesy of: Betty White

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https://www.pexels.com/photo/red-and-white-sign-board-on-the-lawn-grass-8962339/ https://unsplash.com/photos/05XcCfTOzN4

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