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Pros & Cons of Single Family Rental Properties

Written by laurenhenslin

September 21, 2015

Single family properties are great rental properties, but like anything else they have both pros and cons. Here is a list of both.

Single Family Rental Property Pros

  • Usually there are fewer expenses. Tenants tend to be responsible for yard maintenance and all utilities.
  • Tenants tend to stay for a longer period in single family homes. Single family tenants tend to settle down more and usually have kids looking for a good school.
  • Turnover will generally be reduced with a nice home and good tenant screening.
  • A single family home can be sold at a retail price and allows an exit strategy for the property. Usually, the only person who is going to buy your multi-family property is another investor.
  • Your potential buyer base is much broader with a single family home. There are more people out there who can and will buy a single-family home opposed to a multi-family. Making it an easier exit if needed.
  • You may not be expected to furnish the property with appliances. Many single family tenants have their own appliances.
  • Lower property taxes. Generally, non-owner occupied multi-family residential properties are assessed at a higher rate for property tax purposes.

Single Family Rental Property Cons

  • When tenants move out your vacancy rate is at 100%. When a single family home is vacant there is no steady income. This lack of cash flow can hurt financially if the unit is not filled quickly.
  • When vacant, theft and other vandalism can be more of a problem because there is no one there to keep an eye out for your property.
  • 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, etc.
  • There is more upkeep. There are more fences to repair, eaves and dormers to paint, etc.
  • Sometimes management can be more difficult as your properties are more spread out and not all under one roof.

None of these pros and cons are deal makers or breakers, but they may affect your thinking on how you want to invest. It is always good to look at both sides of the spectrum.

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