Investing in a single family home is the ideal real estate investment and one withmany short-term and long-term perks and advantages.
Many jump on the real estate investing wagon to safeguard for retirement and/or make money from their rental properties as passive income. Saving your money in the bank or hiding it under the mattress won’t build you wealth. Why save money if you can invest it and guarantee returns? And what is a single family home in real estate? The main crux of real estate investing is the safe returns and money back guaranteed methodology.
Related: The Best Property Investment Strategies for Beginners
5 Reasons to Invest in Real Estate Right Now
1. Real Estate Typically Appreciates in Value
What makes real estate a safe investment option is the long-term appreciation and equity accumulated over the years of owning your rental property. Not only do you gain value appreciation on owning an investment property, but you also improve your credit score to diversify your portfolio and build wealth overtime.
2. Real Estate Investments Are Tangible
Owning a rental property is a tangible asset, or in other words, a physical asset. Unlike the stock market, buying real estate is a protection against inflation and tends to inflate in value with inflation. There is also a higher ROI on diversifying your real estate portfolio and tangible assets in comparison to stocks and bonds because it reduces the investor’s exposure to overall market risk.
3. Real Estate Can Be Passive Income
Real estate is a relatively stable source of passive income taking into account the location and overall macro conditions. Finding tenants is easy, but finding good tenants requires a thorough screening process and background checks. Once you find good quality tenants for a single family home, landlords can almost guarantee a long-term ROI and mitigate vacancy risk and eviction notices. Make sure rental income covers your mortgage payments and other expenses, while still earning you at least 20% income cushion and more money in your pocket.
4. Real Estate Investments Build Long-Term Wealth
It goes without saying that real estate affords investors financial security and independence in the long term. Owning rental properties will always be a good investment strategy because people will always need a place to live. And as you diversify your real estate investment portfolio, you increase your return on investment and build wealth in the long run.
5. Real Estate Offers Tax Deductions
Just like any business, real estate investors are granted tax perks for running their real estate business. Before you hone in on a market to invest in, make sure to check the property tax laws and other tax incentives for selling and buying real estate respective to that location.
Some tax deduction perks include:
- Operating expenses
- Travel expenses
- Maintenance and repairs
Related: What Is Cap Rate and How Does It Let You Make Money in Real Estate Investing?
7 Reasons Why Investing in a Single Family Home Is a Must
1. What Is a Single Family Home? More Affordable
Buying a single family home is a better business prospect in economic terms than investing in a multi-family homes. For one, it is cheaper to finance a single family home, and the process is less tedious because it involves one unit. Also, getting a 20% down payment on a single family home is more viable for real estate investors, especially if this is their first rental property.
2. What Is a Single Family Home? Better Cash Flow Returns
A single family home has higher cash flow returns because tenants pay the utility bills, whereas landlords owning multi-family homes are responsible for paying the bills. This cuts into their profit returns and adds on to their expenses.
3. What Is a Single Family Home? Quicker to Find Tenants
The probability of finding good quality tenants decreases as the number of units increases. Finding a good tenant for a single family home is a much quicker process, and landlords can succeed in finding good tenants in approximately two-week time. Moreover, finding good quality tenants for a single family home is more manageable than finding multiple tenants for multi-family homes.
4. What Is a Single Family Home? Focus on One Tenant at a Time
In tandem with the earlier point, it is much easier to focus on filling out one unit at a time. In this way, you can focus your efforts on doing the right due diligence to find the right tenant fit for your rental property. You won’t need to hire a property manager for your single family home, but you will definitely need a property manager to find tenants for multi-family homes.
5. What Is a Single Family Home? Lease Long-Term
In general, single family homes lease for longer term and are less prone to high tenant risk. A single unit has a lower probability of vacancy risk and higher occupancy rate compared to multi-family homes.
6. What Is a Single Family Home? Lower Maintenance Costs
Landlords only worry about one single unit and incur lower maintenance and repair costs in turn. A single family home is easier to manage, and it does not need a property manager if the landlord is hands on.
7. What Is a Single Family Home? Faster Appreciation and More Liquidity
A single family home can sell much quicker and in turn has more liquidity than multi-units. They are in more demand and landlords can find prospective buyers relatively easy, given the market conditions. Moreover, a single family home appreciates faster than other types of rental properties because it is always in top demand.
Related: Why You Should Invest in Single-Family Homes and Not Multi-Family Homes
A single family home is the ideal investment to kick start your real estate business or diversify your investment portfolio for greater rewards and long-term financial perks. If you are ready to get your investing on its way, head over to Mashvisor to find positive cash flow properties across the US with the best cash on cash returns and cap rates. You won’t have to worry about crunching the numbers, Mashvisor investment property calculator does the work for you to guarantee the best returns for traditional and Airbnb investment properties.
If you liked this post, subscribe to Mashvisor blog for more real estate insight!