3 Reasons To Put Your Investment Money Into Single-Family Homes

Posted on: 20 June 2018

If you have decided to invest your money in real estate, you will find yourself in good company. There are many people across the country who have spent a lot of time and money in real estate, and many of them have made a good return on their investment. But for someone new to real estate, you will quickly find that there are many ways to invest your money. The following are a few reasons to focus your investment dollars on single-family homes.

1. The rents are not a big factor in the value of the home

The value of a house isn't as strongly tied to the rents as you find with apartments. When an apartment complex is placed on the market, buyers will be taking a long look at the amount of money generated each month from rents. The is a strong factor in the price of the apartment property. But when you invest in a single-family home, the property value will be influenced by similar properties in the neighborhood. Although the rent you can charge will be determined by local, economic conditions, just as apartment complex will be, it will not be a factor when selling the home.

2. Your buyers will not be professionals

Professional investors will not likely be the ones buying your single-family home when you are ready to sell. Occasionally this will not be true if you're selling the home as a rental unit. But you will likely get a higher price when selling to someone planning to make the house their home because the amount of rent you were getting from tenants is irrelevant. Often you will need to make a few improvements to a house before putting it on the market because a house that is offered to a prospective homeowner is evaluated differently than a real estate investor would do. The latter is usually looking at cash flow.

3. These homes are strong collateral for loans

If you are in need of a loan, you will find yourself with good collateral in the form of a residential property. This becomes obvious when the economy is in recession. Apartment investors may have many empty units and struggle to maintain current rental rates. Naturally, this affects property values. Commercial property investors face the same problems. However, when you have one or more single-family homes that are located in good neighborhoods, the value of these investments will remain stable relative to apartments and commercial units.

Although there is a risk with investing in real estate, much of the risk is reduced when you focus your attention on single-family homes. In addition, buying one home is almost always cheaper than an apartment complex or commercial property. For more information on buying homes for sale, contact your local realtor.