If you follow me you already know that the bread and butter of my real estate investing portfolio are single family properties. This is where I made the majority of my wealth. There is a lot of confusing information out there. You have Grant Cardone saying “multi-family properties are the only way to go, single family will get you nowhere." And then you have people like me saying “single family properties are great, you can make a lot of money here."
So I am going to give you the top 5 reasons why maybe you might also want to invest in single family properties.
But before I do that I want to talk about being wealthy vs being rich. To me, being wealthy means being able to make money passively. So when I am traveling the world, sleeping, or doing other projects I am making money with little to no effort or supervision on that project. Or investment!
Rich on the other hand is making a lot of money but in exchange for more work or more attention on something. The difference with that in Real Estate is that single family properties are very boring, easy and passive. And you can make a lot of money in them as well!
Multi-family and student properties will make you a lot more money cash-flow wise, but they require a lot more attention. Multi-family properties also have low quality tenants. And student properties have even lower quality tenants.
There are always repairs to be made, property managers always have a lot more issues, you have more tenants jammed into one building or property, so the odds of problems coming up are just increased. Those properties require more attention, but make you more money. However single family properties make a good amount of money as well but require very little to almost no attention. That’s the difference between the rich and wealthy to me…
So now lets get into the top 5 reason why single family rental properties will make you wealthy.
1: They are super high quality
For me personally I think they are the highest quality “buy and hold” property you can have in any of the real estate niches such as student properties, multi-family, Airbnbs, etc. Single family is the highest quality and the most boring. They attract high quality tenants, because it charges a higher rent as compared to other properties. So these people generally have to be more responsible, work a good job, have a family because they’re renting out an entire home. It’s all for the ease, the boringness, and of having high quality tenants.
2: Money wise, they appreciate the fastest in all of the properties
Student and multi-family properties appreciate based on the income it makes, regardless of its time in the market or how long you have owned it. The more money these properties make, the more value it will gain.
On the other side, the lower the rent, (or if more tenants leave) the more devalued it is going to become. However, single family properties appreciate based on emotions. The longer you own a property the more value it gains. I am sure you have seen this yourself with your own properties; it grows in value more and more every single year. This is very common in North America; properties will appreciate every single year at some given rate guaranteed.
This is all based on emotions and the supply & demand effect. This fact alone can be a major benefit for investing in single family properties, as it doesn’t depend on income. It can also depend on making the buyer feel happy for example painting the walls a nice color or laying down better floors.
3: The rents increase faster than other types of investment properties.
Why? Again it’s all based on emotions.
You can fix the property up to look really nice, or even allow supply & demand to do the work. For example the area I’m investing in right now in Kitchener/Waterloo is a super-hot market with a very high demand and low supply. There are way more tenants looking for properties to live in than there are homes available. Specifically single family tenants who want to raise a family in one home without sharing it with others like in a duplex, triplex, or fourplex.
I also often highlight that you should search for an area with job growth, population growth, and sustainability.
These types of areas will usually see a drastic increase in single family prices, mostly due to the emotion and its supply & demand factor.
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