Invest – Why Invest in Single-Family Homes

Today. I want to talk about investing in single-family homes 

What are the advantages of investing in single-family homes? 

First of all, let’s qualify what a single-family home is. It’s usually a home where there’s one tenant that can live in it. Now that is usually a two- or three-bedroom home with two or three baths. It is usually a private entrance and it’s detached. I guess it could be a townhome because that’s still considered a single-family home. 

What are the advantages of investing in single-family homes? 

The reason why people invest in single-family homes is because it’s cheap. It’s the most inexpensive investment that you can make that gives you a good return. What you do is you purchase the property and you rent it out. The idea is you’re going to make money on the difference between the rent you receive and the expenses. Because single-family homes are cheap, you could usually go to a bank and get a mortgage If you have credit and if you have a down payment. Obviously, that’s what people do. They buy a single-family home, they hold onto it over two to three years, and then they go out and they buy another one. And they keep on adding.

They take a long time and that is okay if that’s what you want to do. And it’s easy. It is nice because it’s usually people that are families, people that are more stable that are renting from you for single-family homes. 

The disadvantage with a single-family home is there is only one income. 

When the tenant moves out, or if something happens with the tenant and they cannot pay rent … all of a sudden you have a 100% vacancy. So be careful when looking at single-family homes. There is the reward of the quick, easy to invest in and the disadvantages that when it is empty it’s 100% vacant. 

The other thing is with single-family homes is that they are good for many different types of investment strategies. 

For example, single-family homes are very common if you’re going to do a fix and flip. That’s probably the most common. 

It’s also a property type that you can use when you’re doing lease options. 

Wholesaling is also a big investment strategy for single-family homes. It’s because those are the people that are having problems or they let their home run down. You come in and you purchase their property, or you acquire their property through a wholesaling contract, which is what you want to do. So you’re trying to assign it to somebody that’s doing a fix and flip. 

So those are the advantages and the disadvantages of owning single-family homes as an investment.

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