Rental Property TypesSingle Family Rental Properties: Why and Where to Invest in 2020 by Hamza Abdul-Samad May 9, 2020May 6, 2020 by Hamza Abdul-Samad May 9, 2020May 6, 2020One of the things that makes real estate investing so popular is the variety. Residential real estate, for instance, consists of a variety of property types. That begs a question, however. What is the best type of residential real estate property? The answer, without a doubt, is single family rental properties. In today’s blog post, we’ll discuss why single family rentals are a must-have for investors in 2020. Specifically, we’ll talk about three things:Why you should be investing in single family homesWhat the best single family rental markets in 2020 areHow to find single family homes for saleRelated: Residential Real Estate Investment: The Formula for SuccessWhy You Should Invest in Single Family Rental Properties in 2020There are five reasons why you should invest in single family rentals (SFRs):The Decreasing Supply of SFRs Leads to High DemandThe most striking feature of single family rental properties is that they enjoy high demand from tenants. As one-unit properties, SFRs garner a lot of attention from a variety of tenants, such as working professionals, students, and young families. This trend has been in place for many years and demand is only increasing in 2020. According to CNBC, the vacancy rates of single family rentals are decreasing. For instance, in the third quarter of 2019, SFR vacancies were at 6.8%. This is a 0.3% decrease from the year prior.While there are a plethora of factors that lead to this high demand, decreasing supply is the primary cause. It’s true that single family homes make up 40% of the rental market and the foreclosure crisis gave this supply a boost. However, supply has significantly decreased year-after-year. As a result, rents from single family rental properties have increased by 3% annually.Single Family Rental Properties Are ProfitableBecause of the decreasing supply and high demand, investing in single family rentals is very profitable for real estate investors. Single family rentals generate high and consistent rental income, cash flow, and a good return on investment. In addition, single family properties benefit from appreciation or an increase in property value over time.With good appreciation rates as well as high rental income, SFRs are the perfect property type for a buy-and-hold real estate investment strategy. Also, like most real estate investments, investing in single family properties allow investors to claim tax deductions, leading to significant savings.Related: Buy and Hold Real Estate Investment Strategy: A Beginner’s GuideThey Are AffordableSpeaking of savings, residential investors will be happy to know that SFRs are considered affordable investments. While the supply-demand factor does lead to price increases, single family homes are still relatively affordable. They are, on average, less expensive than other real estate investment property types, such as multi family properties. This is because single family rentals have less square footage and fewer units. In the long-lasting debate between single family vs multi family rentals, SFRs easily win on the affordability front. This is perfect for new investors who will benefit from the cheaper prices and experienced investors who are looking to expand their real estate portfolio.Financing a Single Family Home Is Not Too DifficultSingle family rental properties are also relatively easy to finance. As you would expect, this is partly due to their lower property prices. SFR down payments, for instance, are lower than those for multi family rental properties. Other financial requirements, such as credit score and cash reserves, follow the standards for real estate financing.Nonetheless, the main reason why SFR property financing is simple is because single family properties are seen as low risk investments for beginner real estate investors. As a result, lenders are more willing to provide beginners investment loans for single family properties.Single Family Properties Are Easier to ManageFinally, single family rentals are relatively easy to manage. This feature is a life-saver for real estate investors, especially those who are familiar with the hassles of multi family property management. Because they’re smaller, SFRs generally require less maintenance and there are fewer tenants to deal with. In addition, tenants treat SFRs with more respect and caution compared to apartments, as they typically see SFRs as their homes. As a result, less damage and repair is likely for single family properties. Investors can decide to self-manage their SFRs. If the math makes sense, professional property management can also be an efficient option.Where to Invest in Single Family Rental Properties in 2020So, where should you invest in single family homes for sale in 2020? For the answer, we turn to Mashvisor’s single family rental data! According to Mashvisor, the best single family rental markets in 2020 are Flint, MI, Redford, MI, Rochester, NY, Mesquite, TX, Portsmouth, VA, and Bartlett, TN.Flint, MIMedian Property Price: $124,090Price per Square Foot: $75Price-to-Rent Ratio: 8Traditional Rental Income: $1,229Traditional Cash on Cash Return: 4.4%Redford, MIMedian Property Price: $115,316Price per Square Foot: $102Price-to-Rent Ratio: 7Traditional Rental Income: $1,115Traditional Cash on Cash Return: 3.7%Rochester, NYMedian Property Price: $135,837Price per Square Foot: $93Price-to-Rent Ratio: 9Traditional Rental Income: $1,211Traditional Cash on Cash Return: 3.1% Search for My Investment PropertyMesquite, TXMedian Property Price: $194,314Price per Square Foot: $11.49Price-to-Rent Ratio: 9Traditional Rental Income: $1,410Traditional Cash on Cash Return: 3.0%Portsmouth, VAMedian Property Price: $186,416Price per Square Foot: $116Price-to-Rent Ratio: 13Traditional Rental Income: $1,190Traditional Cash on Cash Return: 2.3%Bartlett, TNMedian Property Price: $273,844Price per Square Foot: $145Price-to-Rent Ratio: 13Traditional Rental Income: $1,693Traditional Cash on Cash Return: 2.9%How to Find Single Family Rental Properties for Sale in 2020This all leads us to the most important question: How can you find single family rental properties for sale? Once you select a city, you can use Mashvisor to search for and analyze single family homes. Mashvisor’s investment property search tools use the most up-to-date single family rental data available. The heatmap analysis tool, for instance, helps you find the best single family rental market in any city in the US housing market. You can then use Mashvisor’s investment property calculator to calculate cap rates for single family homes as well as cash on cash return, cash flow, and occupancy rate.To find the most profitable single family rental properties, CLICK HERE to start your 7- Day FREE trial with Mashvisor! Related: Mashvisor’s Rental Property Calculator: A Guide for Beginner Real Estate Investors Start Your Investment Property Search! START FREE TRIAL Bartlett TNPortsmouth VARochester NYSingle Family Home 0FacebookTwitterGoogle +PinterestLinkedin Hamza Abdul-SamadHamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property. Previous Post Remote Work: 10 Tips for Property Managers to Retain Efficiency Next Post Buying a Vacation Home Rental: 4 Ways to Minimize the Risk Related Posts Off Market Properties: How to Identify Them in Any Real Estate Market Multi Family Real Estate Investing: Is This the Right Strategy for You? Condominium Investing for Beginners: 6 Tips Passive Income Properties: Do They Exist in Real Estate Investing? The Impact of COVID-19 on Multi Family Real Estate Investing in Luxury Rentals: Does It Make Sense? 8 Reasons to Invest in College Town Properties Buying a Manufactured Home for Investment: Pros and Cons What You Need to Know Before Buying Multi Family Homes for Investment Are Duplexes a Good Investment in 2020? 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