Are single family homes a good investment? Well, sometimes they are. But most people own them as rental properties by default.
What do I mean by that?
It means that they own the property, they bought it because they wanted to to live in it, they move out and they rent it out.
It’s not really that they bought it as an investment property, they just kind of stumbled into it or they inherited it.
So what’s my opinion on single family homes as a rental? In general, I don’t like them.
They’re hard to finance at scale.
If you’re buying just one or two, or five, they can be an incredible investment. But make sure that you’re buying them correctly.
Buy in an area where it’s kind of like a ‘rent by the bedroom’ mentality. That way you can get a ton of rent, and you can utilize some lower down payment options to purchase single family homes.
I have a client that has purchased five or six in the past year, and he has a different strategy where he fixes them up, he makes them a little bit nicer than the rest of the competition, and he does very well.
If you’re going to buy single family homes as an investment property, just make sure that you have a strategy that makes sense so you’re not just out there competing with the masses.
If you wouldn’t buy that property specifically as an investment property because it meets certain cash flow or appreciation returns, then you probably shouldn’t own it as an investment property.
Think about how to sell that, think about how to leverage and build a portfolio with intention.