One of the most common residential properties seen just outside some of America’s biggest cities are stand-alone, single residential dwelling, commonly referred to as “Single Family Homes”.
These are typically separated by walls and open spaces private to each unit.
What is good about single family residential homes as a rental investment?
- A rapidly growing demand
Market researchers and analysts have pointed out that in the last 10 years – half or more of the newly constructed houses were for small families to reside in. Besides, changing family structures, evolving needs of what young parents and children want are influencing decisions leading to a flourishing rental market for such properties.
- Reduced investment constraints
One can get started even with smaller capital investment compared to other types of properties. It opens up opportunities for those who are contemplating an entry into real estate investments, and for those who want to start modestly and wish to grow at possibly lower risks.
- Minimal Occupancy Churn
Given that single detached houses are used mostly by a close-knit family, the motivation to change houses or move is less than in other types of properties. Additionally, single family homes are more often than not a community of their own; adults and children are inclined to develop connections and forge friendly bonds with immediate neighbours.
Social connections, engagements and trust influence decisions leading to families staying in one place as long as possible.
Our team at 33 Holdings enjoys tenants who reside in a property for long terms rather than move regularly. This helps our investments to remain stable and provide consistent returns.
Things to consider while investing in single residential homes
- An empty nest
Sometimes, when a tenant moves out, it could take time to get another tenant to rent the property. The intermittent period would not yield an income.) An investor who has used a mortgage to buy a property may have to bear the cost of financing the mortgage repayment on their own It also hurts investment yields.
- Irregular rental remittance
While it is not normal, there could be very rare cases of a tenant being unable to pay their rent on time. In such a case, the owner would have to spare the time and effort to take actions as required to earn the rents due or find a new resident. It could be a struggle.
- A restricted portfolio
Multi-family residentials come with options like duplexes, triplexes, even quads, etc. It becomes a tad easier to have different offerings in one’s portfolio of real estate investments. To do something similar with single family units – an investor would have to look at spending on several such units of houses together. It could be detrimental for someone who wants a very diverse portfolio.