Real estate is a great investment for diversification, as it can provide steady streams of income that are not subject to the stock market’s volatility. With solid returns and more predictability than many other financial investments, buying a single-family home can be a great way to benefit from appreciation, rental income, and tax advantages.
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Higher Cash Flow Potential
Due to economies of scale, single-family homes tend to provide higher cash flows than multifamily properties. With a single-family property, one tenant only covers the rent and other payments like utilities. Therefore, you would receive all the rental income without sharing it with multiple tenants. You won’t need to make mortgage payments if you own the apartment outright.
Usually, single-family residences increase more in value than multiplexes since they often have greater demand and can go for higher prices. They also boast more features that increase the property’s value– think private yards and updated interiors. Plus, when homeowners want privacy, they’re likely to buy a single-family home rather than an apartment or townhouse.
You can make choices of what single-family property you want to purchase
Single-family housing gives you more control over your investments than multifamily units. You can pick what type of property would work best for you instead of being limited to one option. With many choices available, ranging from fixer-uppers to brand-new homes, there is something that will fit your needs and budget perfectly.
The initial investment is minimal
For example, you can purchase a single-family home for as little as $50,000 or less. It makes it more convenient and accessible for those with limited financial resources to get into the real estate investment game. Single-family housing requires a relatively small initial investment compared to other investments.
Financing is easier
In general, single-family homes are easier to finance than expansive properties like apartment complexes and commercial buildings. The reasoning is that lenders feel more secure financing housing options with less risk.
Predictable and less expensive maintenance
Unlike large properties, single-family homes are easier to take care of, and their costs tend to be more stable. To keep your home in excellent condition, preventive measures such as routine inspections, repairs, and renovations should become a habit. Another advantage is that you only have one tenant who would be held responsible for taking care of any arising maintenance needs.
A greater level of liquidity
Single-family homes are typically more liquid than other types of real estate investments. Liquidity refers to how quickly you can sell an asset for cash or equivalent value. Because single-family properties are small and easy to sell, they’re usually bought and sold on the open market much faster than larger properties, which may take longer to find buyers or renters.
Attractive to tenants
Many tenants prefer single-family homes to multifamily properties because they offer more privacy and amenities like a yard. Usually, this results in your property is easier to rent out and maintain tenancy throughout the year.
You may be able to purchase below-market price
You can buy single-family homes for a price below market value. That’s right – which indicates that you would be spending less than what it is worth and making an instant return on investment. Also, sometimes you can come across houses that need repairs or restoration work to bump up their initial market value. It would be a great opportunity for anyone to make a significant profit.