While single-family rentals (SFRs) may not sound glamorous or exciting, they can be an excellent starting point for new real estate investors. Sure, they won’t bring in as much passive income as an apartment building with multiple units, but that doesn’t mean you should overlook their potential.
Even though my wife and I primarily invest in apartment buildings in this stage of our real estate investment journey, I still love owning SFRs. Let’s take a closer look at the reasons why.
3 Key Reasons to Start Real Estate Investing with Single-Family Rentals
1. It’s easier to get the money to invest in single-family rentals.
If you’re new to the real estate investing world, you likely don’t have an established track record with lending institutions other than the one that funded your personal mortgage. But if you want to buy apartment buildings, lenders either want to see a solid loan history OR significant capital. If you don’t have either one, you may not get very far with your investing.
In contrast, single-family rentals are much easier to get into. That’s because lenders simply want to know you have a good credit score and a favorable debt-to-income ratio. For this reason, SFRs have a much lower barrier to entry than apartment buildings or other larger real estate investments.
2. You can typically get a long term mortgage at a fixed rate.
One of the reasons I love real estate investing so much is the ability to leverage someone else’s money to grow my wealth. When I purchase rental properties, the rent from those units more than pays my mortgage and other property expenses. That leaves me with passive income that I can enjoy month after month, year after year.
With single-family rentals, it’s easy to get a long term mortgage that has a fixed rate. Payments can be spread out over 15 or 30 years and with the interest rate fixed, I’m able to predict my future payments easily.
3. Single-family rentals offer more flexibility.
Hopefully, you’ll be in the real estate investing market for years to come so you can build wealth and even achieve financial freedom. But what happens when you need to sell one of your properties for one reason or another?
If you’ve done your job well and your single-family investment properties are in great neighborhoods, you have several options:
- You can sell your property to a family who wants to live there.
- You can sell your property to another real estate investor who will rent it out.
With larger properties such as multi-unit apartment buildings, you’re limited to selling to a real estate investor which decreases your potential buyer pool.
Learn Wealth-Building Real Estate Investing Tips From a Real Estate Investment Coach
What’s the best type of property to invest in? Ultimately, it’s the one that meets your specific needs and goals. But how do you identify those goals as well as the strategies to make them achievable?
This is where a real estate investment coach comes in. Working with a mentor who’s been there and done that can absolutely propel you along the road to investing success and financial freedom. If you’re looking to scale your business, grow your passive income, and build wealth, I invite you to work with me. I’ll show you the exact wealth-building blueprint that my wife and I have used to grow our wealth with real estate. If we can do it, you can too!