Owning a single family investment home on it’s own can be a bit daunting. The simplest way to define a single family investment home is “getting paid for what you own, rather than paying to own it.” Just like comparing anything, there are pros and cons to owning a single family investment property vs. an apartment complex or duplexes. Let’s dive down the pros.
Did you know that, contrary to popular belief, multi-family properties are not as attractive as single family properties? In fact, the ROI is significantly lower. Most people think more rooms, more revenue, however you must factor in your total ROI, your cash on cash and and your rate of return; you may be surprised to find that it’s actually lower.
Another thing that isn’t top of mind when choosing between single family and multi-family properties to invest in is there is a common area inside and sometimes outside of the building. Because lots of people share a common space, that means there is a higher risk of wear and tear, making your maintenance costs a bit higher. You must factor in everything to get a true picture of your ROI.
Easier to buy, finance & sell
The process to finance a multi-family property is rigorous. Not only will lenders look at 12-24 months of cash flow and rental income, they are also going to take a hard look at your tax returns as well; you are buying a business after-all.
Single family properties could also hold their value a lot better for some obvious and not-so obvious reasons. Multi-family homes usually have a shared space or two, which could indicate some higher maintenance costs in addition to the cost to run them.
Single family homes tend to be a lot easier to sell. Because there are so many people wanting to buy single family properties and not a lot of sellers, single family homes are becoming a high commodity. Why? They are less espensive and you don’t have to jump through as mamy hoops to finance them.
When you think about the customer journey in real estate, the top of funnel is buying a single-family home. From there, it gets smaller and smaller going through duplexes, triplexel, fourplexes, all the way up to apartment complexes and condos. With that in mind, it’s no surprise that the desire for single family homes just increases year after year, which creates pressure within the economy driving more demand.
Low Turnover Rate
One of the biggest advantages of investing in single-family properties is having long-term tenants. It’s very costly (time and money) to turnover a new tenant, not to mention any potential downtime that will be costly as well. The truth of the matter is, keep your tenants happy and you’re good!
At Preferred Floor and Tile Company we stand out in the single-family rental space. Approximately 200,000 homes, or about 2% of the market, are owned by institutional investment firms—we call the SFR industry. We offer a unique, high volume buying experience with a process that results in operational efficiencies to allow our SFR clients to get the most out of their homes for their renters and investors alike. We understand the Single Family Rental business and have installed over 10,000 flooring requests in this industry alone since 2008.