In June 2020, 840,000 single family homes were sold. More people are looking to move away from the small, confined spaces of apartments, and a single family home has gotten more appealing. 

As a real estate investor, you’re probably itching to jump on this trend and add this investment property to your portfolio. Before you purchase a single family house, there are a few things you should consider. Here are the top 5 things you should keep in mind when you start investing in a single family home. 

1. Picking the Right Location

Like any real estate investment strategy, it’s important to consider the location of your investment. Many people looking at single-family homes want to be away from the chaotic city life that apartments provide. But, they don’t want to be so far away that it’s hard to get to anything. 

There is an arc going from Los Angeles to Washington DC that dips into the southern hemisphere of the United States. This arc is a collection of areas that have seen an increase in demand for a single-family rental home. 

If you want to find homes for sale, you can check realtor websites, use online websites, search for foreclosures, and more. One thing to look for is areas where traditional rental property prices are becoming unreasonably high. Why rent an apartment when you could rent a house for the same price? 

2. Consider Alternatives to Being a Landlord 

Landlords and property managers are responsible for the safety and functionality of the rental property. A house can have more repairs and cause the tenant to need you more. If you don’t want the responsibility of a landlord but still want to invest in the real estate market, here are some alternatives. 

Goldman Sachs created the Fundrise program to purchase thousands of single family homes. This program manages the homes for you and lets you add single family homes to your investment strategy. All you have to do is put some money into the program and give it time to grow. 

3. Be Ready to Have the Same Tenant for Longer Periods 

For many renters, the volatile nature of apartment complexes will lead them towards a single family home. A single family house is seen as a permanent move, so be ready to have the same tenant for a longer period than apartment rentals. 

Many renters will stay for longer periods because of the increased privacy. There’s also more space for them to grow and form an emotional attachment. For renters with children, a single family home can provide the stability children need to thrive. 

A good tenant who will stay for years is a dream come true for a landlord or investor. Family renters usually have better credit and established financial history, which makes them perfect to rent to. 

4. Appreciation and Resell Value 

Another advantage to family home real estate investing is the appreciation of the home is based on market changes, not tenant employment. More renters want to live in a single family home instead of a larger rental property, so if you need a new tenant it’ll be easy to find one. 

If you decide that you no longer want the property, depending on the real estate market, you will be able to sell it quickly. The family you’re renting to might even want to buy it. No matter what happens, you have a guaranteed return on investment. 

5. Lease Lengths and Rent Prices 

As mentioned before, rent prices are skyrocketing to the point where renters would rather rent a home than an apartment. When you set the rental price on a single family home, you never want to overcharge your tenant. There is no point in investing in a rental property if no one can afford the rent you’re charging. 

Instead, charging a rent that aligns with market value for that area can be a better deal and cause more people to apply to rent from you. You can still charge enough to get a return on investment, but not so much that it scares renters. The goal is to find a nice balance that works for both of you. 

For traditional rental properties, leases can last anywhere from 3 to 15 months. When it comes to a single family house, leases will be 12 months or longer. This reduces the lack of rent caused by vacancies and expenses needed to find a new renter. 

Invest in a Single Family Home Today! 

Investing in a single family home can increase your income and give opportunities to families who can’t afford to outright buy a house. The value is based on the real estate market and you’re more likely to have tenants for long periods. Adding a single-family investment property to your portfolio is a great financial investment.

If you’re looking for more awesome real estate advice to guide your financial investments? Check out the rest of our blog!