There's a lot to love about the real estate market in Philadelphia, and one of the things we really appreciate is the diversity in neighborhoods and property types. You can come to Philadelphia wanting to invest in single-family homes, new construction developments, high-rise apartment buildings, and smaller multi-family units. There are so many options when it comes to investing in Philadelphia real estate that the investors we work with often want to know where and what they should buy. The market is always shifting, and our job is to stay a step ahead of the trends. We can see what's working and what isn't. We can make recommendations based on our experience and our understanding of this hyper-local industry. One thing that has always remained consistent for us is our belief in the profitability of single-family rental homes. Single-family homes are the best option for investors right now. Whether you're buying your first property or adding to an existing portfolio, we can tell you that single-family homes are the way to go for a number of reasons.
Single-Family Homes are In High Demand
Meeting the demand for single-family homes has been complicated. With the rental market growing and remaining so competitive over the last couple of years, demand has outpaced supply, especially when it comes to this type of investment. So, if you have a single-family home to rent out that's in a good location, you can expect high rents and steady retention. The inventory on the sales market is loosening. With interest rates rising and the sales market peaking, many buyers are backing off a bit, which leaves more availability to investors who recognize an opportunity. You can find single-family homes in a number of diverse and unique neighborhoods around the area, and you can often negotiate a good deal. Demographic changes also favor single-family homes and reflect the demand of the local market. Right now, single-family rental homes are among the fastest growing segments of the U.S. housing market. Large, corporate investors are buying up what they can, and in some cases, they're building entire communities of single-family homes with the intention of renting them out. Why are single-family homes so popular with well-qualified renters?
- They appreciate the extra space
- There's more privacy
- Tenants enjoy access to safe, established neighborhoods that are family-friendly and usually in good school districts.
When you invest in single-family homes, you're ensuring that your tenant pool will be strong now, in the current market, and for many years to come.
With Single-Family Investments, You're Attracting Long-Term Tenants
As we have already said, one of the main benefits of investing in single-family homes is that you can access a large tenant pool. It's more than the tenants you attract. You also have to consider tenant retention. Holding onto residents and renewing lease agreements is extremely valuable. People who want to move into a single-family home are likely to be more stable and reliable. They want to settle in for a while and probably won't move as soon as the lease term ends. This type of tenant stability contributes to more rental income and higher ROI. You won't have to worry as much about vacancy and turnover costs, and you can project what you'll earn in rent from year to year.
Higher Rental Values and Appreciation with Single-Family Homes
When it comes to what you earn, single-family homes are likely to deliver more money. Your apartment units and multi-family properties come with their own benefits. But, if we're looking strictly at earnings, the single-family home that you buy and hold will make more money for you over the long term:
- Typically, you'll earn more rent on a single-family home than you will on an apartment, condo, or multi-family unit. People are willing to pay for the benefit of living in their own home. They'll enjoy some outdoor space, potential garage parking, and extra square footage in a residential neighborhood. That will translate into a higher rental value.
- Your long-term earnings will also be higher. Single-family homes have always appreciated in value faster than multifamily units. Your value is increasing even while your tenants continue to pay down your mortgage.
- When you're ready to sell your asset, you'll sell it for more and turn your equity into higher returns. Property values will continue to climb when you invest in a single-family home, and that means you stand to earn more money on the investment in both the short and long term.
Take a look at your investment goals. Unless you're looking specifically for multi-family units and buildings, you can expect higher earnings with single-family rental homes.
Maintaining and Improving Single-Family Homes
The improvements you make to a single-family home will increase rental values. More so than with any other property type. You'll also have the benefit of tenants partnering with you to maintain the property. Your tenants are more likely to help out in the care of your property. They typically feel more invested in the home. You can expect them to change the air filters regularly and potentially even help out with lawn care and snow removal. Ultimately, maintaining your investment property is your responsibility. But, you're likely to find that your single-family home tenants will be proactive in keeping things in good shape. They'll want a lawn that looks nice and they may be willing to try to fix that toilet noise on their own before complaining about the problem or turning in a maintenance request. There are a lot of options when it comes to investing in and around Philadelphia. That's good news for investors like you. If you'd like to consider single-family homes and how these rentals can increase the value of your investment portfolio, we'd love to discuss your investment strategy. Please contact us at Innovate Realty, and we'll talk through your options for investing here. At Innovate Realty, we work with investors of all experience levels in the greater Philadelphia metro area as well as surrounding suburban areas in Montgomery, Chester, Burlington, and Delaware County, to the Delaware River.
