The Pros and Cons of Single Family Rental Properties

Real Estate Agent with JP & Associates REALTORS® 0615028

When you mention the word "landlord" to most people the image they have in their head is of an owner of a multi family building. However many landlords, including myself, own single-family rental properties.  Single family properties can make great rental properties however there are some pros and cons to owning single family rental properties.  Here is a short list.

Single Family Rental Property Pros

  • Fewer expenses as tenants are generally responsible for yard maintenance.
  • Tenants looking to lease a single family home usually have children so a good school district is important to them. This means they tend to stay longer than tenants how lease multi family.
  • A single family rental property does not always have to be a rental property so when it comes time to sell, your be selling at retail price and not at a discount to another investor as with multi-family properties.
  • Many single family home tenants have their own appliances so you may not need to supply them.
  • Compared to multi-family homes, a single-family home can have lower property taxes each year. Commercial real estate is usually taxed differently and tax values can be higher compared to single family properties.

Single Family Rental Property Cons

  • When a single family home is vacant there is NO money coming in.  This lack of cash flow can be painful if the unit is not leased quickly.
  • Not every house is in a neighborhood that is without Homeowner Association (HOA) fees. In Frisco, TX 90% + of the subdivisions have mandatory HOA fees.
  • With single family homes as your rental properties, everything you have that can break multiplies.  You have more roofs that can leak, more air conditioners that can go out.
  • Fewer economies of scale.  The likelihood of an investor finding 10 single family houses built the same year with the same floor plan, heating system, plumbing and fixtures is virtually zero. With a 10 unit apartment complex all the light fixtures, toilets, countertops, paint colors and appliances are the same which can make repairs and upgrades less expensive.
  • Management could be more difficult as your properties are more spread out and not all under one roof.

“Invest in what you know.”

When getting started in real estate investing single family homes is what most investors are more familiar with. Although there may be a level of comfort with single family properties it is still a good idea to weigh the pros and cons before making an investment.

When I am looking for a single family rental property here in Frisco TX, there are a few things that it must have.

  • 3 Bed, 2 Bath under 2000 sq. feet
  • Good School District
  • Near to major highways
  • No more than 10 years old.
  • No swimming pool or yard requiring high upkeep.

Comments (1)

Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA

SFRs are easier to finance and get comps for which is very important to the beginner investor....

Aug 05, 2014 12:04 AM