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A Guide to Single-Family Property Investing

House symbol sitting over a bar graph

If you’re new to property investing or are just starting to consider investing in your first property, you’ve likely asked yourself, “Is it better to invest in single-family properties or multi-unit properties? What are the advantages? Which type of property should I invest in?”

Although there are pros and cons to both types of properties, single-family properties are great for first-time investors, experienced landlords, and anyone who falls in between the two. If you’re considering taking the plunge to purchase a single-family property, here are a few things to think about before doing so that will help make the process as simple as possible.

Why single-family properties are a good investment

One of the biggest advantages of single-family properties, especially for novice real estate investors, is that they usually cost less and require less capital upfront. Bear in mind that lenders typically require a down payment of at least 20% for residential real estate loans. So, for a $100,000 property, you’d only need to put down $20,000. Multi-family homes have a larger sticker price, so your down payment would also increase.

Single-family properties also appreciate faster than multi-family properties, which means that your property will increase in value over time. As InvestFourMore states, “Multi-family properties are valued on the rents coming in, while most single-family homes are valued on the supply and demand of owner-occupied buyers. If rents go up in an area, then multi-family housing prices will rise as well, but only if the rents are raised to meet market rental rates.”

What to consider before your investment

Real estate agent sitting at the desk by the window and passing keys to his client in the officeBefore you decide to make this type of investment, you must review your personal finances to ensure you have the means to take on this expense. One thing that is central to the home-buying process is your credit score and making sure that you have at least the minimum credit score to buy a house. If you fall below the minimum, you will likely be given a higher interest rate on your loan. Although there are many things you can do to repair your credit score, one major one is to make payments on time consistently, as 35% of your credit score depends on your payment history.

Another important factor to consider is the responsibility of becoming a property owner. If this is your first investment, you may fail to consider the responsibility a rental property may require in terms of time, attention, and communication with tenants. If your lifestyle doesn’t allow for these responsibilities, you should consider consulting a property management company to help cover these.

The benefits of a single-family property

Aside from the financial benefits of investing in a single-family property, additional benefits make the property-owning process much easier. For one, you only have one group of tenants to manage, rather than an entire complex in full. This makes managing requests, making repairs, or even collecting monthly rent a much simpler process than multi-unit properties.

It has been found that tenants of single-family homes reside in their units longer than tenants of multi-family homes or apartments. This means that as a property owner, you get the opportunity to get to know your tenants better and can establish a long-term relationship with them. Many property owners also find that tenants of single-family houses tend to take better care of the homes because they feel it is their home more than an apartment is.

When to know you’re ready for this investment

Investing in a single-family property is a major milestone and is a decision that you should take the proper time to think about before you put in an offer. Think about the following questions:

  • Can your finances handle this major investment?
  • Can you cover the down payment required to purchase a home?
  • Is your credit score high enough to be considered for a loan?
  • Do you have the time and attention required to manage a rental property? If not, can you utilize a property management company to do so?
  • Are you willing to devote resources to the upkeep of your rental property?

If you can say “yes” to all of these questions, then congratulations! You’re ready to purchase a single-family property. The next step will be to chat with one of our Greensboro property managers. We make it easy to invest without the stress. Contact us today.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.