Guide On The Importance Of Investing In Single-Family Rentals

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    Single family residential (SFR) was not traditionally a good target for the investors but now it is becoming a booming business. Any kind of real estate investing has a goal of making good money. Most investors prefer putting money on investments and letting it make some huge profits for them. There are popular ways in which investors are now using the single-family homes and they include:

    • Purchasing, doing renovation and then flipping
    • Purchasing and then holding for tenants who are long-term
    • Purchasing and then holding for vacation rental

    Why Do Investors Like SFR Real Estate?

    Investors, especially those new into the business, are always advised to invest in the SFR real estate. There are many reasons for this and it may lead you to gaining a lot of profits as an investor. Some of the reasons are:

    • A cash flow generation that is steady and consistent – This is the most favorite part of investing in rental property. You may start getting a good cash flow every month if you are able to purchase an SFR at a considerable price. You may still be able to keep some or lots of profit after removing the rental expenses, paying down mortgages or even investing in any other property.
    • The appreciation potential – This is another reason that makes SFR very important to the investors. The home values always have a tendency of appreciating with time. Home values have always been increasing with 23% for the last 5 years. Some markets have even increased with over 50%. What makes the investors rush for some of these properties is that the appreciation is annually expected for several years ahead in most major markets.
    • Diversification – People investing in SFRs can purchase within the markets, across the markets and even at several price points inside a market when they are able to make a choice. Returns from the SFR are not in a correlation with the stock market. They are able to offer an opportunity of diversifying investments across the assets as well as the regional markets.
    • Low volatility – The private property real estate investment has stayed to be among the low volatility investments in the past 20 years. It has done this as it provides the best and the highest yields. 
    • Serious tax advantages – It is not specifically a unique thing to the SFRs but generally, rental property gives some exemplary tax benefits like: 
    • 1031 exchanges
    • Depreciation
    • Deduction of fees for property management as well as expenses for operation
    • Deduction of the insurance as well as the property taxes
    • Deduction of the mortgage interest

    The single-family rental real estate gives you a chance of diversifying all your holdings in the real estate. They also allow you the advantage of investing in the cash flow assets across the geographic markets which offer several benefits over the other assets of investment. SFR are the best way to start investing your property and the advantages above simply makes this clear for you. 

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    • Tom La Vecchia

      Founder of New Theory & X Factor Media

      Founder and Publisher of New Theory Magazine and Podcast. Serial Entrepreneur who loves wine, cigars and anything that allows to people to connect and share experiences.

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