The Best Single-Family Home Investment Options
It’s always good to approach any significant investment with a solid plan. This is especially true when buying real estate. Most investors buying multi-family properties are purchasing them for the rental income potential. Single-family homes, on the other hand, offer a wider variety of investment options. There are numerous ways that you can get a great return on investment (ROI) from a single-family house. Before you buy, however, it’s best to figure out what you plan to do with the property once you own it.
Here are some of the single-family home investment options for you to consider:
Rental Property (Short-Term)
Just like multi-family properties, a single-family home investment can be great to buy and then rent out. Before your purchase, you will want to crunch the numbers and make sure it will be a profitable investment. Look at the overall cost of owning the property (price, taxes, repairs, upgrades, ongoing maintenance, HOA dues, property management fees, etc.) versus what you can realistically expect to receive in monthly/annual rental income.
We included “short-term” in parentheses because some income property owners will not want to hold onto their properties for more than a few years. No matter what your investment plan, make sure you know your exit strategy. With a short-term rental property ownership, you will want to understand how the equity affects your overall investment potential. If you time it right, you might do well with a great short-term equity gain. If not, you may end up losing equity or not gaining enough to be worthwhile. In this case, you are depending solely on the rental income for your profits.
Rental Property (Buy and Hold)
Long-term rental property ownership is also known as “buy and hold” because you plan to own the home for a longer period (typically more than five years). This usually comes with positive equity gains over time as you endure the natural ebbs and flows of the real estate market. You do have to factor ownership costs going up (including property taxes as your house gains in value) as the years go on, but then again you will be raising your rent as needed (especially any time a new tenant moves in). If you are planning to buy and investment property and hold it for many years, you’ll want to do as much research and planning as you can before you decide on the property and make your purchase.
Fix and Flip
Flipping properties is a popular practice for a reason. You can buy a house that needs some work. You spend the time and money to get it repaired and make upgrades that will increase its resale value. Then, you put it back up for sale and make a healthy profit. As with any investment, you want to have a good plan and run all the numbers to make sure it will be a profitable investment. It’s never as easy as the “reality” shows on TLC make it look. You have to project how much it will cost you to fix up and how long it will take (to calculate ownership costs during the rehab and resale period). When fixing and flipping properties, there are a couple common approaches people take:
- Live-In Rehab—Some investors will literally go from one home to another. They will live there as a primary residence while making the necessary renovations and upgrades. Once it is sold, they will move onto their next investment.
- Secondary Property—Most investors have their own home(s) where they live and then buy secondary properties to fix and flip. The rehab process usually goes quicker with this method, but obviously the costs go up as you have multiple properties to deal with. Getting the investment property ready to sell and then sold at a good price becomes more urgent.
One more real estate investment strategy is the quick flip. This is when one investor finds a good property, buys it and then sells it to another investor to fix up, rent out or utilize for whatever other investment usage. Quick flippers aren’t planning to hold onto the properties for long, so it usually works best when you already have buyers lined up. If you are not doing the work to rehab or rent it out yourself, then you want to resell it as soon as you can to minimize your ownership costs and maximize your profit margin.
These are a few ways that real estate investors make good money with strategic single-family home investment options. There are other methods, as well, but these would be the most common that we see within our PropertyLark buyer network. The reason real estate investors come to us is because we run thorough and customized analytics to identify the best investment properties throughout the country. Then, we pass them on to our exclusive list of property buyers who have qualified to join our network.
If you are interested in joining the PropertyLark home buyer network, get started by filling out the contact form to the right of this page or on any page of our website. There will be some simple questions to answer as we get to know your investment goals and financial plan. Once you qualify, then we will send you great off-market properties in the area of your choice, so you can start making the most of your real estate investments!