No matter how much attention goes to crypto and stocks these days, some investments have withstood the test of time. That’s why most millionaires still agree that real estate is the best investment around today.
If you’re thinking of investing in real estate but all the multi-units were snatched up or you don’t have the cash for such a big down payment, you’re in luck. Single-family homes can still be just as profitable without a major upfront cost, but only if you do it right!
Let’s talk about single family property management so you can get the most out of your investment!
Find the Right Building
A single-family unit is a little riskier than multi-families, only because when somebody leaves, you’re not making income until you fill the vacancy. For that reason, it’s best to find a reliable property and location.
Always get the building inspected thoroughly before purchasing. Major structural repairs could cost a lot more than you make in your fist year, so be extra thorough. New paint is easy, a new roof is not.
More importantly, choose the right location. A single-family home in a suburb on the commuter rail line outside of Boston is likely to find tenants year after year, regardless of the economic standing. However, a building in a declining neighborhood two hours outside of Memphis could be a toss-up.
Access to downtown areas, public transportation stops, public schools, and important landmarks are your best bet. Stores will come and go, so try to find a reliable neighborhood in your area as best as you can.
Use It as a Selling Point
Let’s be entirely honest, nobody loves living in multi-family homes. Having neighbors that close to us can come in handy when we need to borrow something, but most of us value our privacy.
When marketing your building, be sure to use the single-family residence as a main selling point. Potential tenants would love to see buzzwords like:
- Private yard
- Single-family home
- Quiet building
You get the point. You’ll still be able to set your own policies for the building, but you’re likely to get a lot more responses if you market the property correctly.
Set the Right Prices
Now, the “2 percent rule” in real estate says that you need to charge 2% of the value of your building to make the investment worth your time. Not only is this hotly contested in the industry, but it’s not often feasible for single-unit homes. However, a single home property can still be just as profitable!
You won’t have to pay commercial property taxes, market and repair units as frequently, or carry out a lot of the same work most landlords will with bigger units. This means you’re likely to save some money on expenses.
At the same time, you want to find the right balance on rent prices to ensure that you’ll make a profit. Charging at least mortgage rates and property taxes can ensure you mostly break even, but what about maintenance and repair costs?
If you’re thinking long-term, it’s okay to break even while paying off the mortgage, as it will all be profit after that. However, paying out of pocket for a new roof can be expensive. Always find the right balance between overcharging and undercharging, which is often the biggest challenge with managing properties with one unit.
If you had a four-unit home and one bad tenant, you’re likely going to be okay for the year. However, if you have a single unit, a mortgage payment, and an eviction moratorium, then that’s not the case. One bad tenant could do a lot of harm to your investment.
For that reason, you need to be diligent about who you let into your building. In real estate, your only defenses are preemptive, meaning you have to do the work before making commitments. This means credit screening, background checks, income verification, and references.
Once you have tenants, you probably won’t need to be around the building as much as you would with five or six units. However, it’s important to still be available to your tenants and keep an open line of communication as much as possible.
Remember, communication is a two-way street. If tenants don’t feel they get a chance to talk to you, they may never tell you about the drip coming from the ceiling. Two months later, you need a new roof.
Find the Right Single Family Property Management
If you’re unsure about managing single-family homes yourself, then consider hiring single family home property management. For a small portion of your rental income, they will do all of the work of being a landlord for you and you can just sit back and watch the checks come in.
Not only will your property management company be available to handle calls at a moment’s notice, but they can also help you set the right rental prices, manage your budget, market your properties, and find the right tenants. It’s a win-win, especially if you want to travel, retire, or move at any point!
Start Earning Today
Now that you know how to successfully manage single family property management, why wait? Real estate is one of the most lucrative investments to get started on, and you can easily find expert help to secure your investment.
Get started today and keep up to date with our latest tips to help you maximize your profits!