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Pros and Cons of Investing in Single-Family Homes | California City Investment

August 13, 2021
Pros and Cons of Investing in Single-Family Homes - Article Banner
As an investor, you have a lot of decisions to make. One of the first things you’ll need to decide is what type of property you’re going to buy. 

Single-family homes are always attractive to both investors and tenants. California City has a great inventory of single-family homes, some of them in new construction HOA neighborhoods and others in older, more established communities. 

There are pros and cons to single-family investments. Deciding whether it’s the right type of investment for you will depend on your investment goals, the amount of risk you’re willing to tolerate, and the amount of responsibility and interaction you want to have with your management team and your tenants. 

Pro: Single-Family Homes and Earnings  

A single-family home is always a great investment option because highly qualified tenants enjoy renting them. The tenants you attract with a well-maintained single-family home in a good location will want stability, and they’ll probably take care of the home just like it’s their own. You can expect them to stay in place for more than a year, and they’ll be attentive to taking care of the home. 

Pro: Single-Family Homes Earn Cash Flow and Appreciation

Cash flow is easily achieved with single-family properties because they usually rent for more money than multi-family homes or apartment units. The returns are also more reliable in both the short term and the long term. You’ll earn higher rents and your investment will also increase in value faster and more reliably than a multi-family home.  

Con: Vacancy Risks are Higher

There’s less vacancy risk when you invest in multi-family properties. Owning a single-family home means having one source of rental income. If that tenant falls behind on rent or suddenly moves out, you’re left without any income. This can be unnerving, especially in a slow market where competition for tenants is fierce. 

Pro: Utilities are a Tenant Responsibility 

With single-family homes, it’s easy enough to require your tenants to set up their own utility accounts. They have their own electricity, gas, water, and trash services and you can require in the lease that they set up those accounts before they move in. The tenants will be responsible for receiving and paying the bills every month, and they may also have to pay deposits and handle turning off the utility services when they move out. 

You’ll have to decide how you want to handle things like landscaping, lawn care, maintenance, and if you have a pool - pool upkeep. These responsibilities should be written into the lease agreement and discussed with tenants. 

Con: Higher Maintenance and Management Costs 

When it comes to per-unit maintenance and management costs, single-family investments will cost more, usually. Maintaining a single-family home will be more labor-intensive, even if your property is new or in good shape. Expect to spend a little more keeping it in excellent condition. 

These are just some of the things to think about when you’re weighing the benefits and risks of single-family home investments. We can help you with your investment decisions and all your California City property management needs. Please contact us at JBL & Associates. 



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