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Why Single Family Houses Are Your Best Investments

By Chad Carson 27 Comments Filed Under: Getting Started, Rentals & Landlording

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“After 32 years of investing, I still buy houses instead of apartments or shopping centers. Why? [Single Family] Houses make me more money with less work than any other investment.
  John Schaub, Building Wealth One House at a Time

John Schaub (JohnSchaub.com) is one of my favorite real estate teachers.

When asked, I recommend his book Building Wealth One House a Time to all real estate investors.

Some of the best strategies and investing philosophies I have implemented came directly from John. And some of the biggest mistakes I’ve made were forewarned by John as well!

One of John’s main teachings is summarized in the quote above – stick to single family houses.  I would add to this category small multi-units like duplexes, triplexes, and quadraplexes in good neighborhoods.

John teaches that you can’t beat single family houses as investments for a number of reasons. I’ve summarized them here:

1. Hybrid Investments (Best of Both Worlds):

Houses are unusual in the investment world, because they provide rental income but their retail value doesn’t depend directly upon that rental income.

A 10 unit apartment building, for example, will go up or down in value depending upon how much net rent is produced.  A well cared-for vacant house can go up in value just like a rented one because your buyer likes the home and the neighborhood, not the income.

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2. Safety:

Even during bad real estate markets, ask any banker what they’d rather loan money against – a single family house in a nice residential neighborhood, a large commercial property, or a stock portfolio?

A single family house is usually the banker’s answer. That should tell you something.

Houses are relatively stable and tend to hold their value.  There are many more buyers for houses than other types of real estate.  Vacancies are much shorter because the demand for residences is always high compared with commercial properties.

3. Non-professional Sellers:

When you buy houses, you often deal directly with a seller who is not a full-time, professional investor.  Professional investors normally want to make a profit when they sell, and they’re often better negotiators than you are.

A normal homeowner may be selling for non-financial reasons, and solving that problem is worth money to them.

4. Unlimited Supply of Deals:

Every day new sellers decide to sell their houses.  People move, start families, get divorced, retire, and pass away.

There are many more single family houses in an average town than any other type of real estate investment.  This makes for an abundant source of new deals.

5. Lower Management Tenants:

Compared with apartments, lower end houses, and mobile homes – tenants for decent houses in decent neighborhoods are much more self-sufficient and tend to pay on time more often.  If you value a wealth of free time and addition to a wealth of money, this factor is crucial.

6. Divide Your Money Into Multiple Baskets

One of the key principles of investing is to diversify. This basically means don’t put all of your eggs in one basket in case you’re wrong or you screw up (which happens to even the best).

Owning single family houses allows you to spread out investment capital among different deals in different neighborhoods.  For example, with the same amount of money it takes to buy one 10-unit building in a single location, you might diversify by owning houses in several different locations.

7. Get Retail and All Cash When You Sell:

This is perhaps the most compelling strength of single family houses.

The federal government has a long term vested interest in subsidizing the housing market.  It’s very political that people are able to buy houses.  Therefore many loan products are available that allow buyers to purchase a house and pay you all cash.

When you sell a mobile home park, commercial building, or lower priced double wide or house, it’s much more difficult to get cash at a retail price when you sell.

Final Thoughts:

The beautiful thing about a free market is that everyone can do business in their own way and it still works.

This philosophy of investing in real estate is just one of many.

There are other investors who love large mobile home parks. Some who buy large multiunit buildings. Still others swear by commercial shopping centers.

Each property type and specific location comes with its own set of pluses and minuses.  The meta-lesson here is to consider your own choice of investments thoughtfully.

If the benefits of single family house investing suits you, be sure to check out John Schaub as one of your sources of education.  And of course, keep reading more of my blog and E-Newsletter as I’ll share more examples and strategies from this philosophy.

enthusiastically your coach,

Chad Carson

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Tagged With: single family houses

Comments

  1. Real Property Management Citywide says

    April 8, 2017 at 11:24 am

    Thank you for pointing out why single houses are the best investments. This can definitely help people to decide which real estate they want to investment on.

    Reply
    • Chad Carson says

      April 11, 2017 at 11:01 am

      I’m partial towards SFH as pointed out. But I also understand there are benefits to all sorts of types. The important part is matching up your needs/skills with an asset that makes sense. Single family houses just happen to match up with a lot of people.

      Reply
    • Jalonni says

      January 10, 2021 at 11:27 am

      Nothing beat the fact that multi family homes pay for themselves opposed to single family where if the tenant leaves your stuck with a mortgage

      Reply
  2. Tammie Houston says

    November 11, 2019 at 1:20 pm

    I have been dreaming of my own house since I graduated because I don’t want to be dependent on my parents. It is true that houses are relatively stable and its value increases as time goes by when it is taken care of properly. Moreover, I’m looking for a real estate agent that can provide me options for the sample single homes that are for sale.

    Reply
    • Chad Carson says

      December 10, 2019 at 10:31 pm

      That’s great! I love that dream. And it works even better if you can find some roommates to pay you rent for the extra bedrooms. You can sometimes even live for free by doing this “house hacking.” I wrote an article on it here: https://www.coachcarson.com/house-hacking-guide/

      Good luck!

      Reply
  3. Tori Raddison says

    December 10, 2019 at 3:55 pm

    I love how you said that a vacant house can go up in value because that makes me feel a lot better about renting a house out. I’ve been thinking about getting a single-family home to rent out to students because I live right next to a college. It’s nice to know that occupied or not, the value could increase.

    Reply
    • Chad Carson says

      December 10, 2019 at 10:32 pm

      I rent to students as well, and it’s done very well for me. Most of mine are small apartment units, but a house can work just as well. I hope it works out well for you!

      Reply
  4. Alec Burns says

    January 9, 2020 at 11:17 am

    It’s good that you point out that single-family homes are a good way to invest your money. I’ve been looking for a new asset to purchase with my extra money, and I’m considering buying some single-family homes. I’m going to look for a good real estate agent that can help me purchase some single-family homes.

    Reply
  5. Zoe Campos says

    February 24, 2020 at 4:04 pm

    Thank you for reminding me that single-family homes are the best choices for investments as they are stable and they tend to hold their value. My parents are considering moving into a new place and they wanted something that they could put up in the market after a few years. I’d tell them to invest in those kinds of homes since it can go up in value just like a rented one if the property is well-taken care of.

    Reply
  6. Shaylee Packer says

    March 18, 2020 at 10:26 am

    As you mentioned, even in times of bad real estate markets, bankers are more willing to give loans for single family homes. Do single family homes tend to hold their value better then other housing options? My husband and I are looking for a place to live, and we are trying to decide on if a condo or a single family home is better for us. I will have to keep these thoughts in mind as we begin to make the decision.

    Reply
  7. Rita Sanders says

    March 26, 2020 at 12:58 pm

    My husband thinks we should start investing in single-family homes. That’s why I liked it when you said a normal homeowner might be selling their home for non-financial reasons. You could very easily find a good deal that way!

    Reply
    • Chad Carson says

      March 27, 2020 at 9:49 am

      Thanks for reading, Rita. Yes, finding someone not just trying to sell for top dollar is a key to buying good deals on single family houses. Good luck to you and your husband with your next investments!

      Reply
  8. Todd Stauffer says

    March 31, 2020 at 10:14 am

    I love how you said that the federal government is helping to subsidize homes to ensure that people can buy houses. This seems like a great reason to buy a single-family home because you could get it for cheaper than market value. Considering how much growth is happening across the U.S. getting a cheaper home would be a real blessing for some people.

    Reply
  9. Derek McDoogle says

    April 24, 2020 at 4:29 pm

    It’s interesting how you explain that it might take the same money to invest in a building with 10 apartments than buying single-family homes in different areas. My boss told me that he would like to diversify his wealth by investing. I will recommend him to read this interesting article so that he can see the benefits of buying angle family homes to rent them out.

    Reply
  10. Nelson Fogerty says

    April 30, 2020 at 4:25 pm

    It’s helpful that you point out that buying a single-family home is a great way to invest your money. I’ve been looking for a way to diversify my investment portfolio, so I’m considering buying a single-family home. I’m going to look for a good real estate agent in my area that can help me purchase a single-family home.

    Reply
  11. Alicia Byrne says

    June 1, 2020 at 12:19 am

    I agree with you that single-family houses bring in more chances of deals in a town. I see a lot of people in my area buying single-family houses for investment and was thinking if I should be doing the same. I would definitely talk to my husband about it and see if he agrees with me about buying a single-family home as an investment.

    Reply
  12. Alicia Byrne says

    June 13, 2020 at 12:56 am

    I think you made a good point that tenants for single-family homes are easier to manage in general. My husband is thinking of investing in single-family homes in a newly developed area around where we’re currently staying. I will ask him to look for appropriate real estate agents so that we can score a good property for investment.

    Reply
  13. Shaylee Packer says

    June 19, 2020 at 9:12 am

    As you mentioned, in buying a single family home, you can gain in the investment. It is also said the banks are more willing to give out loans for single family homes than multi family homes. My parents have been looking to buy an investment property, I will have to share this article with them, and see if it helps give them direction.

    Reply
  14. Conrad O'Connor says

    August 11, 2020 at 2:01 pm

    It’s cool that this article elaborates on how buying single-family homes can be a great investment. I’ve been looking for a smart way to invest the money I just inherited from my father’s estate, so I’m considering buying a single-family home. I’m going to look in my area for a reputable real estate agent who can help me purchase a single-family home.

    Reply
  15. Jonathan Hansen says

    August 25, 2020 at 11:13 am

    It’s awesome that this article elaborates on how buying single-family homes is a smart way to invest your money. I just inherited a large sum of money that I want to invest in real estate, so I’m considering buying a single-family home. I’m going to search for a good real estate agent in the area that can help me purchase a single-family home.

    Reply
  16. Levi Armstrong says

    September 17, 2020 at 6:50 am

    I like that you mentioned that one of the reasons why single-family homes are an excellent investment is that tenants tend to be more sufficient and pay on time, which means that you wouldn’t be spending much of your time as a landlord. My mom plans to invest her savings in something lucrative that would provide her with passive income. I’ll suggest that she invests in a single-family home located in an in-demand neighborhood. Thanks for this!

    Reply
    • Chad Carson says

      September 27, 2020 at 3:49 pm

      Great to hear! I hope the properties work out well for you mom. Good luck!

      Reply
  17. Megan Alder says

    October 5, 2020 at 2:31 pm

    My boyfriend and I want to start investing in our future, and we are thinking about buying our first house. I like that you said buying a single-family home is the best option due to we can divide our money into multiple baskets once we start buying more houses in the future. We’ll definitely follow your advice to ensure that we do the right first investment.

    Reply
  18. Megan Alder says

    October 8, 2020 at 3:19 pm

    My husband and I are thinking about starting to invest in buying properties, and we are looking for advice. I like that you recommend starting to purchase single-family homes so we get to have lower management tenants. We will definitely make sure that we choose the right real estate agent to help us find a nice home.

    Reply
  19. Fred Gibbons says

    November 10, 2020 at 12:45 pm

    It’s interesting that you elaborate on how buying single-family homes can be a great way to invest in real estate. I’ve planned on getting into real estate investing for a while, so I’m considering buying a single-family home. I’m going to look for a reputable business in my area that can help me buy a single-family home.

    Reply

Trackbacks

  1. The Free & Clear Real Estate Goal | Coach Carson | Real Estate, Money, & Life says:
    May 25, 2015 at 3:02 pm

    […] Although the plan can work with apartments, mobile homes, or commercial real estate, I would argue in most cases that houses are your best investments. […]

    Reply
  2. The 2-Minute Drill of Life: Is It Too Late To Invest in Real Estate? - Coach Carson says:
    October 20, 2015 at 5:17 am

    […] John Schaub, one of my favorite teachers). Start with something simple and understandable, like a single family house or a small multi-unit building.  If needed, use solid financing with no short-term balloon […]

    Reply

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