Why You Should Invest in Single-Family Properties
Real estate investment properties come in all shapes and sizes. Some investors prefer commercial properties, others like multi-family homes, and others prefer apartment buildings. However, as many experienced investors know, the best opportunities for protection and profit can often be found in single-family properties.
The most common form of easily purchasable property nationwide, single-family homes serve homeowners from coast to coast. Another term for a home that houses a single family – unlike something like a duplex or an apartment building that can house many households simultaneously – that is often freestanding, most residential properties throughout the country are single-family homes. A comfortable way to build a life, single-family homes are in high demand. This is why you should consider purchasing a single-family home for your next investment endeavor.
Supply varies widely by location. Single-family homes are not as readily available in San Francisco, for example, then in other areas, but single-family homes are among the most common housing opportunities throughout California. Offering a private place to live without any of the inconveniences that come with a multi-dwelling building, many families dream of owning or renting a standalone home.
Investors who wish to build a large portfolio often run into struggles purchasing multi-family property. Far rarer overall than single-family homes, it can be very challenging to find multi-family properties that are both for sale and meet your price point. In certain areas of California, single-family homes, on the other hand, are available and can make great investments.
When making a decision regarding what kind of property to purchase, carefully evaluate the options available in your area. Your due diligence can include things like average time on the market, rental prices, and demand, both on a standalone basis as well as versus multi-family homes. Through this exercise, you can determine whether or not the supply of multi-family properties can live up to your expectations, and whether purchasing primarily single-family homes is best for your long-term strategy.
Easier to Rent
In hot rental markets, landlords need to best cater to the demands of clients. And, in many cases, renters want to see a single-family home versus a duplex or multi-dwelling property.
For those who own their own home or who have only lived in large apartment buildings, the logic behind this may seem a little confusing. However, there are many upsides to a single-family home that larger properties can’t meet. Apartment buildings, for example, can be loud. Music, heavy walking, crying babies, and loud conversation can easily be heard through shared walls, disrupting things like studying and sleep. Management companies – the primary owner of larger buildings – can be hard to work with, imposing rules and policies that can upset tenants. Landlords may do things like impose quiet hours or fail to evict people causing problems, creating a hostile place to live.
In a single-family home, renters have far more freedom. They don’t have to worry about sharing a wall with bad neighbors, dealing with the imposition of large management companies and their rules, or living in close quarters with anyone. Single-family homes also tend to be larger than smaller units in multi-family dwellings, giving families more space to spread out and live comfortably when buying isn’t an option.
What works best for you doesn’t always work best for renters. When planning your investment strategies, be sure to evaluate how your long-term vision will align with the nature of the market in your area. Multi-family dwellings only succeed when renters feel the same way.
Able to Withstand Ups and Downs
Ups and downs in the market can be devastating for any investor. When the market dips, things rapidly start to change, and that can mean an immediate loss of revenue. However, the right investment can still hold its value and help you weather the storm with as minimal damage as possible. One of the best choices? Single-family homes.
In general, standalone homes are more desirable. When you have a nice property and don’t drive prices through the roof when the market shifts, you should have no shortage of renters.
In preparing for any downturn, it’s important to keep pricing on par. It’s true that a vacancy in a single-family property can be costly – after all, a renter is your only immediate way to turn a profit! As such, keep your eye on average rates and be sure to price appropriately to ensure renter interest. When out of step with market fluctuations, it’s impossible to stay on your feet for long.
Easier to Renovate and Repair
Which would you rather renovate: three units or one? When pricing is of concern, one is the clear choice. When you have a single-family home, you’re only managing a single property with one space’s worth of concerns. This means that when you have a change you need to make; it will be far less costly to make it.
Speed is also possible with a single property to oversee. This means that if you want to see an increased ROI based on improvements, you can turn things around much more quickly. A multi-family building can be far more difficult to renovate, especially as scheduling around both vacancies and tenant availability can create significant logistical hurdles. This can mean stretching things like counter replacements in all units out over the course of weeks or even months. With a delayed timeframe, costs can be higher and seeing an ROI can take more time, too.
Projects can also be more challenging in multi-unit properties. For example, plumbing that reaches all units in a building is usually more complex, so a big problem can cost a lot more and take a lot longer to repair. Replacing a water heater or HVAC unit can be significantly more costly, making it more difficult to afford the kinds of routine upgrades that can be required to maintain a desirable rental property.
There are many things a single-family property owner can do to refresh a property to increase the rent that potential renters are willing to pay in a way that a larger rental building can’t accommodate. Things like a nice garden, a paved walk to the front door, fresh paint on the exterior, and a new roof if one is needed, can all appeal to renters. While it’s always important to keep outdoor spaces in proper condition, the little landscaping details will resonate far better with a single-family home. Multi-unit buildings don’t necessarily have green space outside of every front door; this kind of change speaks to a property as a whole, not necessarily the experience of an individual renter. This varies by your area, but generally, single-family homes are a perfect fit for many families.
Better Future Opportunities
As good investors know, the state of a portfolio is always in flux. When the market changes, personal needs and income opportunities can also change. As such, so should an approach to real estate investment. It’s important to make purchases in the scope of how individual and investment needs could shift – today, tomorrow, and even years from now.
A single-family home offers arguably the most potential for the future. Easy to purchase and rent out, a single-family home is ideal for those who want a rental income without the commitment of a multi-unit dwelling. If liquidity becomes an issue, fixing and flipping a standalone residential property is much easier than a larger building; residential homebuyers are everywhere and can be attracted to any property with the right marketing. This means a higher likelihood of a fast sale, putting cash in your pocket for future investment requirements.
And, if for some reason, you require a residence, it’s possible to move into your single-family home, whether permanently or on a temporary basis, and continue to receive advantages from your property purchase. With the ability to serve as a rental, a fix and flip, or a home, there’s no better way to step into investing in a low risk environment.
Real estate investment is truly a personal decision, but some choices are usually safer than others. If you want a way to grow your portfolio while maximizing your ROI and increasing opportunities for the future, a single-family home is a great way to do so.
Scott Clift is a licensed real estate broker with Westpark Loans. He has been in the real estate industry since 1994. His team of seasoned professionals specialize in providing real estate loans for investors and other self-employed individuals. When you are ready to invest in real estate, call Westpark Loans to secure your financing at (844) 574-LOAN or by visiting westparkloans.com.