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Jan 16

Why are single family homes a good investment?

Investing in Single Family Homes.

Investing in Single Family Homes.

Beyond the basics of why single family homes are a good investment!

Single family homes are a better investment than stocks, mutual funds, bonds and gold!  You know the obvious reasons, tax advantages, appreciation, cash flow, leverage; there is no need to reiterate what others have said.

Here’s the real reason why I like investing in single family homes.

I have found single family homes to be 95% more desirable to renters than duplexes and multi-units. It has been my experience in my real estate market that people like their space and if they can avoid having a neighbor above or next to them, they will opt for a single family home over duplexes or apartments. I find single family homes more desirable to rent and easier to sell.

Most of our investments are buy and hold.  Our goal has always been to have enough rental property to support the life style we desire. Once a single family home has been purchased for pennies on the dollar, rehabbed and rented, they tend to be low maintenance. Your rehab is the key to minimizing maintenance. Fixing things properly and using the right materials will maximize profits and your investment for years to come.

Once a tenant has been placed in your single family rental, really the only time you hear from them is for a maintenance call or to give notice that they are moving. You make sure your tenants pay rent every month, write a check for taxes and insurance and that’s it. It’s like purchasing an ATM that spits out passive income every month.  Once we have one ATM set up and cash flowing, we can concentrate our efforts on another, without the management headaches of tenant drama.

Quality single family homes at or below market value are extremely desirable to home buyers.  Fix n flips are crucial to your real estate investing business as they build cash reserves, which fund other fix n flips or purchase more buy and hold properties.

Renting single family homes can generate an amazing return, in a down market. When investing in real estate, investing in a market where rents have not taken the same hit as property values is extremely important. For example, houses may have declined in value, but rent rates remain the same, they have not decreased. What happens if you want to cash out in 5 years and house prices have not increased the expected 5% per year?

Your all in cost of the single family home ws $100,000, for the past 5 years, it has cleared $15,000, after all expenses, this is your profit. In 5 years you have already made $75,000.

Are you losing money if you sell the investment for $100,000?

Are you losing money if you sell the investment for $90,000?

“I would say that single family homes are cheap now. If I had a way of buying a couple hundred thousand single family homes… I would load up on them, and I would take mortgages out at very, very low rates. So it’s a very attractive asset class now.”

~ Warren Buffett

Could billionaire Warren Buffett be wrong?

Single family homes are lucrative, viable, income producing investments. The population is not declining and the demand for single family homes is not disappearing anytime soon.

To learn more about REO properties, download our book, Building Wealth Through Real Estate: 3 Letters Every Real Estate Investor Needs to Know-R-E-O, only on amazon.

~Happy Investing