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Single-Family Rentals: Advantages of the Asset Class

Continuing on from previous posts in our Single-Family Rental introductory series, we want to highlight the benefits of investing in Single-Family Rentals. See previous entries here:

Single-Family Rental (SFR) investments 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.


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Written by the Roofstock marketing team.
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