Advantages of Investing in Single-Family Rental Properties

Continuing from previous posts in our single-family rental introductory series, we want to highlight the benefits of investing in single-family rental properties.

Single-family rental (SFR) properties have several attractive characteristics that investors are drawn to. Here’s a brief overview of the most significant advantages for investors to consider:

Steady cash flow generation: With leases in place, cash flow can be calculated, and as rental demand increases in a particular market, rising market rents can be predicted.
Appreciation potential: Home values tend to appreciate over time. Over the last five years, home values have increased 23% (some markets are up over 50%) and low-to-mid single digit appreciation is expected annually for the next several years in many major markets.
Diversification: Returns from SFR investments are not correlated to the stock market and provide an opportunity to diversify investments across assets and regional markets.
Low volatility: Private real estate has been one of the lowest volatility investments over the last 20 years (while delivering some of the highest yields).
Leverage: In many cases, financing is available for SFR investments, which allows for further diversification of assets and increases overall returns. This differentiates investing in real estate vs. investing in stocks; investors often aren’t able to use debt to invest in the stock market.
Diversified exit strategies: Broader exit options vs. other real estate asset classes with the option to (a) sell to homeowners or (b) sell to another investor offer greater options for liquidity.
Material tax benefits: Owning SFR investments qualifies owners for numerous tax benefits including operating expense deductions, interest expense deductions and accelerated depreciation. Roofstock encourages all investors to consult a tax professional before making investments.

Single-Family Rental properties allow you to diversify your real estate holdings and invest in cash flowing assets across geographic markets that offer a variety of advantages over other investment assets.