The local real estate market is pretty hot right now, and there are a lot of options for investors who are looking for great rental homes. You can choose new construction condos in gated communities, single-family homes in the city and suburbs, and established neighborhoods with a diverse mix of homes and residents.
Our team works with new and experienced real estate investors all the time, and a growing number of out-of-state investors who rely on our insight into the local rental market. Whether you’re looking to buy your first property or you’re building a large portfolio of real estate, we think single-family homes are the best way to invest in our market.
Today, we’re offering you a playbook to effective and profitable single-family home investment strategies.
Here’s what you want to do, and why.
Leverage Single-Family Market Demand
First, get comfortable with this investment choice. Lean into the demand that’s been created by residents who are looking for an experience as well as a home.
People overwhelmingly prefer to rent homes, not apartments. That’s one of the reasons that this is a winning strategy.
Meeting the demand for single-family homes has not been so easy over the last few years. With the rental market growing and remaining so competitive since the pandemic’s worst days, demand has outpaced supply, especially when it comes to this investment type. So, if you have a single-family home to rent out that’s in a good location, you can expect high rents and steady retention.
A lot of experts thought that with the rents rising so dramatically, people would shy away from single-family homes and prefer a more economical unit in an apartment.
Not true.
The inventory on the sales market has been loosening. With interest rates remaining higher than most buyers would like and the sales market peaking in most markets, many buyers are backing off a bit, which leaves more availability to investors who recognize an opportunity. Be that investor. You can find single-family homes in a number of diverse and unique neighborhoods around the area, and you can often negotiate a good deal.
Statistics are showing us that single-family rental homes are among the fastest growing segment of the U.S. housing market. Large, corporate investors are buying up what they can, and in some cases, they’re building entire communities of single-family homes with the intention of renting them out. They have a playbook, too, but independent investors also have an opportunity to buy and rent out these properties and make some great money.
Let’s look at why this hunger for single-family rental properties is so intense:
Tenants are looking for extra space, especially those remote workers and tenants working from home.
There’s more privacy to a single-family home. A yard, even.
Tenants enjoy access to safe, established neighborhoods that are family-friendly and usually in good school districts.
When you invest in single-family homes, you’re ensuring that your tenant pool will be strong now, in the current market, and for many years to come.
Capitalizing on Long-Term Tenants with Single-Family Properties
Attracting good tenants must be part of your playbook when you’re renting out a single-family home.
And, it should be easy. But, it’s more than just attracting tenants. You also have to retain them.
Residents who want to move into a single-family home are likely to be stable and reliable. They want to settle in for a while and probably won’t move as soon as the lease term ends. These are tenants who want the experience of homeownership without the expense and responsibility.
This type of tenant stability contributes to more rental income and higher Net Operating Income (NOI).
Maintaining and Improving Single-Family Homes
Another part of your playbook: maintenance and ongoing improvements. By taking good care of your property and making the necessary upgrades and updates, your single-family home will enjoy higher rental values.
You’ll also have the benefit of tenants partnering with you to maintain the property. Residents living in single-family homes are more likely to help out in the care of your property because they tend to feel more invested in the home. You can expect them to change the air filters regularly and potentially even help out with lawn care and snow removal if that’s what you’ve written into the lease and agreed upon.
Earn More.
Single-Family Homes Simply Earn More
Whatever numbers you’re looking at, single-family homes are likely to deliver more money and higher profitability, especially in this market. Your apartment units and multi-family properties come with their own benefits. But, if we’re looking strictly at earnings, the single-family home that you buy and hold will make more money for you over the long term:
Rents are higher because people are willing to pay for the benefit of living in their own home. They’ll enjoy some outdoor space, potential garage parking, and extra square footage in a residential neighborhood. That will translate into a higher rental value.
Your long-term ROI will also be higher. Single-family homes have always appreciated in value faster than multifamily units. Your value is increasing even while your tenants continue to pay down your mortgage and help you build equity.
When you get to the point that you’re ready to sell your investment, you’ll sell it for more and turn your equity into higher returns. Property values will continue to climb when you invest in a single-family home, and that means you stand to earn more money on the investment in both the short and long term.
Take a look at your investment goals. Unless you’re looking specifically for multi-family units and buildings, we’re going to help you invest in single-family homes.
Let’s talk more about why. Please contact us at EPOC Property Management. Not only can we help with the leasing, management, and maintenance of your investment properties, we can tell you why certain properties are likely to be profitable rentals than others. We’re focused on financials and results. Bring us your investment goals, and we’ll help you meet them.
