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single family homes are a great investment

Investors are Buying More Single Family Homes – Why?

House prices in Seattle are still on the rise and bargains are hard to find however investors continue to bolster their portfolios with strategic purchases of single family homes. Generally real estate investment is a longer term strategy to build a steady return over time. Seattle’s market is currently being driven by true demand for good rental houses and purchasing the right investment property can be the savvy thing to do for your portfolio.

Here are a few reasons why you should consider investing in a single family home:

Appreciation Potential

Single family homes have the benefit of land appreciation – where the limited supply of land means demand will always grow, resulting in a guaranteed appreciation value. If the house has potential developable land attached, this will work to increase the appreciation value.

Keep in mind that location also plays a strong role in appreciation. Investors should look at where the more desirable neighborhoods for renters are – like Capitol Hill, Belltown or Queen Anne. Then look further into the desirability inside the neighborhoods in terms of how your investment will appreciate, for example what developments may occur and what facilities are nearby?

Finally, single-family homes tend to appreciate more than the other popular investment properties – like condos or townhouses. Single family homes are stand alone properties which are not affected by neighboring properties in the same way as shared properties. Single family homes are viewed more positively by potential buyers as they allow you to have more control over the overall condition of the property and do not come with fees associated with shared housing.

Strong Demand from Renters

Rental properties are not sitting idle in Seattle which is great news for property investors. Data firm RealtyTrac reports that only 4.3% of rental houses owned by investors were vacant in the first quarter of 2016. Seattle has seen a steady influx of higher income renters who prefer the flexibility of renting and don’t have plans to buy in the immediate future. High demand for rental property means low vacancy and higher rental prices to boost your ROI.

Hedge Against Inflation

Real estate investment can be used as a hedge against inflation because of its intrinsic value that doesn’t erode through inflation.  House prices tend to be negatively correlated with stocks and bonds and single family rentals in particular are great for a diversified portfolio. While there are more passive methods of investing in real estate such as investing in loans or real estate funds, one of the most direct route to benefit from real estate hedging is owning single family properties that can be tenanted.

 

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