Investing in Single-Family Rental Homes
Source: National Association of Realtors® (NAR)
When real estate professionals think about a rental property, they often picture multi-unit apartment buildings – but they should envision single-family homes. Single-family rentals have increased by 31% in the past 10 years and make up 42% of the housing stock.
When investors buy a house to flip, they have the cost of buying, repairing and selling. When they buy a single-family rental, they only have acquisition costs.
Single-family rentals are a good way for entry-level investors. They’re generally less expensive and families that rent them typically stay longer, reducing turnover costs – and investors usually don’t have to do as much renovation to make a rental attractive.
Additionally, rentals offer three financial benefits: income, equity, and appreciation. You look for the ROI (return on investment).
A simple rule – whether you’re selling or buying – is the 1% rule. If the rent is 1% of the sale price, it’s a good return and a good investment.
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