A single-family home is a standalone property on its own lot. Investing in a single-family home is basically investing in a house or condo to rent to a single tenant. One of the simplest definitions of single-family rental property investing is getting paid for what you own, rather than just paying to own it. If you are a first-time investor looking to get into real-estate and have done your research, you are probably bogged down with options. Year after year, the single-family rental market continues to grow. Throughout the past decade, investors have found single family rentals to be a lucrative field.
Learn And Understand The Options
Educate yourself! There are a lot of options for turning a profit in real estate. Identify and understand each option, as well as which one is the right fit for you. For this blog, let’s assume you choose single-family rentals as your investment choice. The single rental investment class is nearly the same size as the multifamily sector. The projection by many is that the single-family rental growth will outpace all other asset classes including multifamily this year.
Key Strategies For Single-Family Rental Investors
Single-family homes rise in value faster than multi-family homes. It is true that real estate and rental properties may be wonderful long-term investments and it is true that acquiring rental properties has the potential to generate stable long-term revenue.
If you want to add single-family rental investments to your portfolio, here are some smart strategies to get started…
- Your rentals do not need to be in your own geographical location: Today, online platforms allow investors to explore a potential rental property from the comfort of their own home. They can get important analytics such as offering documents, inspection reports, neighborhood scores, and more to back up their decision. You can invest in a market across the country and partner with a property management firm long distance. They will have the expertise in the area and a local network to help manage your investment.
- Set it and forget it: Consider investing in REITs (real estate investment trust). This is a company that owns and manages income-producing properties. You are able to purchase shares in REITs and generate wealth from real estate without owning actual property. One of the advantages of buying shares in a REIT is the broad diversification. Possible disadvantages include the correlation to the stock market and potential reliance on market trends.
- Talk with a financial expert: Depending on your credit, current assets, past investment history, income, and a variety of financial elements, banks may be able to loan you start-up capital. Rising rental rates and high occupancy rates resulted in strong performance for single family rentals over the last two years. Institutional investors have reacted by allocating significant equity dollars to the SFR sector. As a point of reference, while individual investors continue to own a significant majority of single-family rentals, only 14% of multifamily units today are owned by individuals.
- Return on your investment (ROI): A return on investment, or an ROI, is a type of measurement used in real estate to determine how much money is made from an investment. This is typically calculated as a percentage of the cost of the investment. Overall, return on investment is essential for investors as it shows them how well their investment dollars are being used. ROI helps investors commit to an investment property as they are certain there will be a rate of return on rental property. You will want to ensure you are maximizing your ROI, by taking certain steps used by veteran landlords and expert property managers. A few suggestions are to give tenants the amenities they want, retain reliable tenants by screening them, and keep up with property maintenance.
Whether you decide to invest in single-family rentals or not, the sector is growing fast. As this happens, regulators will be more involved, which could affect the future of the industry. One thing is certain, though: single-family rentals are becoming a popular real estate investment, and they aren’t going anywhere just yet. 43% of Generation Z prefers living in single-family rentals.
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About Real Property Management Midwest
We are local property management experts serving Cincinnati, Dayton, Columbus, & Louisville. We manage Single-Family Homes, Apartment Buildings, and Condos. With years of experience, Real Property Management is Cincinnati, Dayton, Columbus, Louisville and Northern Kentucky’s #1 Property Management and Leasing Company.