There are several different approaches to investing in real estate. Some investors specialize in buying up low cost properties and flipping them, others join in real estate investing groups, while others invest directly in rental properties. Renting is on the rise as home ownership declines and as Millennials delay home-buying in order to pay off student loan debt and preserve flexibility. In the current market, single-family rentals are proving to be a good bet for investors for several reasons.
Compared to multi-family properties, single-family rentals yield higher returns. On average, an investor can expect a 10% return on a single-family home, but the percentage might be higher in areas where housing prices are low. Atlanta, Georgia is one of the top cities in the nation for real-estate investors because single-family rentals offer a return of up to 25%. The key to successful investing is to find the right neighborhoods where houses are priced relatively low but can command a good rental price.
Another advantage of single-family home rentals is that they tend to be more stable. Multi-family units experience greater turnover and longer gaps when the property is not rented. Single-family homes are more often rented by families and older residents who have a greater need for stability, and they are more likely than apartment tenants to remain in a home for at least five years.
Cheaper To Maintain
Renters of single-family homes generally pay their own utilities, whereas utilities are more likely covered by the owner of an apartment building. In addition, repairs to an individual house are less expensive that repairs to a multi-family building, since a problem with any individual unit could require a repair of the entire roof, plumbing system, or air conditioning system, for example.
Easier To Sell
Compared with multi-family units, single-family rentals are much easier to re-sell because there is a wider market of potential home buyers. Rental properties are only purchased by other investors, whereas houses can be sold to first-time home buyers, down-sizing home buyers, housing rehabbers, and of course, other real estate investors.
Even though the housing market is in a slow recovery, there is a trend away from home ownership that is having an impact on the real estate market these days. For further insights on real estate investing, check out the website of Jonathan Shechtman.