"Ultimate" Residential Rental Property

What is the “Ultimate” Residential Rental property? Many experienced investors might well say, “Apartments”. This can range from a Duplex to hundreds of units in a Complex. In my “Illustrious” Real Estate career, I have been involved in ownership of various sizes of these complexes.

However, today I still own several Residential Rental properties, of which none are apartments. I believe for the “Average” (if there is such a thing) investor, the ULTIMATE Residential property is the Single Family House. “Well, Jack”, you say, “Why do you make a statement like that?” Let me count the reasons why.

1. The Single Family House (SFH) is easier to manage. One unit – One tenant.
2. The SFH is easier to finance or refinance.
a. Institutional Lenders much more are inclined to loan on a SFH than a
Multi-Unit property.
b. Private Investors also will usually favor lending on the SFH. This is especially
beneficial for rehabbers.
3. The SFH is much easier to sell than larger properties. The demand for SFHs far
exceeds Multi-Unit. More buyers who can afford to buy.
4. The SFH is easier to maintain because there are fewer things that will require repairs.
5. Greater choice available in SFHs for investors who want to get involved in Rental Property.
6. The SFH offers a greater Tax Advantage for the Investor. If managed by the Investor,
things like interest paid, taxes paid, and depreciation can create tax deductions.
7. The SFH is easier to understand, especially for the newer or beginning Investor.
This is true because most people already know a lot about SFHs because they have been
living in one for most of their life, up to now.

Acquiring and holding single family houses as rental property is a great way to set up one’s retirement plan. If a person, say at age 30, 40, or whatever acquired just one house a year by the time they reach retirement time, they should have a good steady income from the houses.

A good thing about rental income is that in the event of inflation, the rents will go up along with everything else. One question a person might ask is, “How am I going to buy a house a year? Where am I going to get the money to do that?” The answer is you do that by acquiring financing for the purchase. If you have good job income and good credit you look to your bank or other Institutional Lenders.

If this is not the case or if you would rather just not use Institutional Lenders, there are many houses you can finance with the seller or private investors. If you doubt that just look at your newspaper in the “Houses For Sale” section and you will find houses that offer Seller-Financing, often with the statement “No Credit Check”.

Another good way to find houses to acquire is to look for those that are in need of repair. Often these houses are vacant. If you happen to be handy with fixing-up, you can often acquire a house with “Sweat Equity”. If not, you can look for a handy man who can help you get the house fixed up and ready to rent.

One final comment: If you own a house free & clear, or with a lot of equity, you can always raise cash if you need to by selling or borrowing from an Institutional or Private Lender.

These posts are the opinion of the author who is not engaged in rendering legal, accounting, or investment advice. If such advice is required or desired, the services of competent professional persons should be sought.