Video 4-Investing in single family rental homes

Investing in single family rental homes

Single-family rental homes comprise more than one-third of all U.S. rental properties — about 16 million currently. The demand is at an all-time high.

If you’re new to single-family rental investing, you can think about it is like an inflation-adjusting bond with an equity kicker. The rental income less operating expenses generates current distributions — like the coupon on a bond — and rents can be adjusted to against inflation. Then, the equity “kicker” comes in the form of building wealth as your tenant pays down your mortgage for you while the property value grows over time. It’s common to enjoy a nice double-digit overall return on your investment over an extended holding period.

It is actually not hard.  Here are five tips:

1. Know your investing goals

With any investment, you need to know your objectives. If you focus on safety and security, consider a more expensive property in a good school district. But if you are seeking higher returns, you may want to invest in lower-priced homes, you may get higher annual return and potentially higher long-term returns.

2. Diversify your investment

You can and should invest in different neighborhoods. Diversification is one reason. Another is access: If you live in an expensive urban with relatively high home prices, finding a property that has good cash-flow could be challenging. There are blue collar neighborhoods that are very affordable in price and offer stable income. 

3. Separate investing from operations

While some people do choose to self-manage, hiring a property manager can save you a lot of time and potentially money in the long run. While property manager typically charge about 8% of the rent, they manage properties for a living and can work more effectively and efficiently. They ensure the property is leased, in good condition, and the tenants are happy. Additionally, using a property manager will enable you to invest in different markets.

4. It is a long term investment

Investing in single-family rental home is about building long-term wealth. You will get a big payoff as your tenant pays down your mortgage. If you buy a decent house in a decent area, the returns will be significant over time and can add a bundle of other benefits to your overall investment.   

5. Tools and resources are available

This investment has been around for a long time. Tools and resources are abundant. You probably know someone who owns a rental home. Currently we have listings of 2 very nice single homes in Akron Ohio. Solid neighborhoods, very nice houses. Check them out.