Why Single-Family Rentals Are Good Investments
Updated: Apr 25, 2019
When making a property investment, it is crucial to know which properties are destined to fail and which properties are secret gold mines. It can be difficult to determine the potential return on investment for a property.
Single-family homes are successful rentals for property investors. These homes are in high demand from trustworthy, accountable tenants, meaning vacancy rates will be low and rental payments on time. Single-family rentals are perfect for the novice investor and the expert alike, providing a steady stream of income and peace of mind.
What Are Single-Family Rentals?
Soaring housing costs and a stabilizing economy mean more families are looking to rent a home rather than purchase one. Single-family rentals are small- to medium-sized detached properties that provide just enough space for a single-family unit, including parents, children, and a pet or two.
Single-family rentals are the fastest growing segment of the housing market, according to a recent study by University of California, Berkeley’s Terner Center for Housing Innovation. These homes are usually in suburban neighborhoods and comprise 62 percent of all housing stock in the United States.
Renting a home in a good neighborhood is much less expensive than purchasing one. Single-family rental units located in suburban areas are close to schools, businesses, and stores, making them attractive to young families.
Single-family rentals are in high demand among low- to middle-income families. Cramming a whole family plus pets into a two-bedroom apartment is not an ideal situation for today’s young families, which is why they’re seeking single-family home rentals rather than home purchases.
Single-family rentals provide many of the qualities and amenities these families desire, including:
· Private laundry
· Parking spaces
· Ability to have pets
· Good schools
· Backyard space for children and pets
· Storage space
· Noise control
· Safe neighborhood
· Good landlord relationship
· Friendly neighbors
· Adequate size to house their families
Families are also looking to rent single-family units to gain upward mobility. Transitioning from an apartment to a house feels like a “step up” for many of these renters. Having the option to rent a home in a good neighborhood is preferable to purchasing a home in a less-desirable area or renting an apartment.
Property investors will meet this demand if they purchase and rent out single-family units – and because of this high demand, property investors will prosper if they purchase single-family units in desirable neighborhoods.
Accountable and Trustworthy Tenants
Young families looking to rent single-family units are usually secure in their finances. The parents in these families are educated, responsible, and hold steady jobs. They will usually have an established rental history with solid credit. This means these renters are more likely to pay rent on time and in full. They are not as likely as other renters to skip out on rental payments; since they have children to look after, making sure their housing payments are on time is a top priority. Single-family units can provide a property investor with an accountable and trustworthy revenue stream.
Managing all your investments can be difficult without a synchronized management system. Home365 offers portfolio management software so you can stay up to date on all your properties, in one easy-to-use place.
Contact Home365 today to learn more about our services and to schedule a free demo.