One of the great things about owning investment property in Santa Rosa is that there’s a diversity to the types of rental homes that are here. Single-family and multi-family rental properties have their own unique benefits and drawbacks, and prospective real estate investors should weigh these options carefully before taking the plunge and making a purchase.
For our market, we like the return on investment (ROI) that’s provided by single-family homes. You’ll hear a lot of people complain about how hard it is to cash flow a property in the Santa Rosa real estate market. That may be true to an extent, but the long term ROI you can earn on a single-family home is pretty impressive, especially if you keep it occupied and well-maintained.
Let’s analyze some of the benefits to investing in single-family homes in Santa Rosa.
Leverage Your Single-Family Investment
If you’re not sure how or where to start investing in real estate, single-family homes are a good place to begin. They come with lower start-up costs, for example. Buying a single-family home will require less cash than buying an apartment building or a piece of commercial real estate. You can get a traditional mortgage for a residential single-family home purchase with a down payment that isn’t higher than 20 percent. Taking out a commercial loan will require more cash.
Increasing Value and Resale Potential
In addition to immediate costs, there are several other benefits to single-family rental properties.
Demand for homes is always higher with single-family residences. When it’s time to sell your investment, the resale opportunities will be better on a single-family home than they’d be on an apartment, duplex, or townhome. These types of properties are much easier to sell, especially since prospective buyers include traditional homebuyers as well as real estate investors. This significantly widens the pool of potential buyers.
Single-Family Homes and Santa Rosa Tenant
Single-family properties are also in higher demand on the rental market.
This trend is only going to increase as demographics shift and older Americans sell their homes in higher numbers for a low-maintenance lifestyle. These sellers still want the space and privacy that come with a single-family home. Many tenants in Santa Rosa would like to buy a home, but cannot afford it or don’t want to give up the flexibility. Renting a single-family property is often the next best thing. The Millennial generation is beginning to start families, and many new parents prefer single-family homes over apartment buildings.
Tenant Retention and Single-Family Homes
Lower tenant turnover is another benefit to single-family investments.
Tenant turnover is a major inconvenience and expense for real estate investors. It takes time and money to clean rental units, repair damages, place listings, show the property, and screen new applicants. Investors also lose rental income if a unit remains vacant for too long. Tenants at multi-family rental properties are less likely to consider the rental their own home, while renters of single-family properties typically want to establish roots. Single-family rental properties encourage stability.
We love talking about real estate investments and helping owners analyze their Santa Rosa real estate options. If you’d like to talk more about where and how to invest, please contact us at Redwood Residential Property Management.