Why Single Family Investment Homes?

By Dan Valentine

Building an individual single-family home rental portfolio can be one of the most stable, minimum risk, high return investment available. Designed for long-term hold, this investment can make a substantial difference in the stability of your retirement. This investment has been proven for over 30 years of personal involvement. Single Family Home Rentals have high leverage, tax benefits, tenant pays off the mortgage, property appreciates in value and absentee ownership is common. Unlike most investments, the single family home will appreciate based on market conditions, not income, creating investment tax treatment and benefits combined with market appreciation (which has gone consistently up for 30 years I have been involved).

For the younger and middle age investor with time in their favor, this portfolio can be an integral part of their future success. We have proven, with actual examples, that if leveraged correctly, a portfolio can grow substantially in as little as 10 years. One of the benefits is that this portfolio can grow itself. With normal appreciation after several years the homes can be refinanced and money from equity used to purchase more homes or return all your cash and the tenant still makes most of the payment. The goal is to eventually affect a 1031 tax deferred exchange of these homes (deferring all tax on the gain) into a more suitable investment nearing retirement. Eventually paying off the loans on this portfolio can create a substantial cash flow for retirement income.

This portfolio has greater flexibility than most investments since, unlike apartments, one home can be sold off without disrupting the entire portfolio or traded for different types of investments such as apartment complexes, land, commercial etc, as the investor’s goals change. Controlling a $200,000 asset with 10% or 20% invested is still one of the great benefits (leverage) of this type portfolio. (the entire asset appreciates, yet you only have 10% to 20% cash in it and the tenant pays the bulk of the payment)

Rental homes will always be in demand. Just in 2005 with the price increases in homes, many thousands of would be home buyers are now tenants for many years. They were priced out of the market, but still have to live somewhere. The single family home will always be in demand, unlike apartments, they offer privacy, yards, parking, storage and the neighbors don’t have to know if they are owners or renters.

We specialize in absentee ownership. Many of our investors have not seen their homes in 5+ years, some never, nor do they have any desire to do so. They trust us to preserve the asset, maximize the cash flow and minimize the liability. We never take that trust lightly.

Dan Valentine, GRI, e-PRO

Owner-Broker

Dan@Valentineteam.com