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Five Reasons Why We Invest in Single-Family Homes Rather Than Apartments

At SpringView Investments we currently are purchasing single-family homes as our long-term investment strategy. I have often been asked why we invest in single-family homes; "Wouldn't it be easier to purchase one big apartment building?"

While we don't think multi-family investing is a bad investment, we just think that our investors can earn a better return and have more upside in a portfolio of single-family homes. Here are five reasons:

1. Investment Return May Improve

We believe that many single-family homes may now be purchased at a significant discount compared to historical prices. Why? Home construction is down: in 2014, according the U.S. Census, 806,000 new homes were built nationwide. During the 2005 peak year, 1,356,000 new homes were built. And demand is up: “Homebuilder confidence is at its highest level in almost a decade, said Bill Banfield, vice president at Quicken Loans. “The number of first-time homebuyers looking to enter the market is increasing.”

2. Greater Supply of Single-Family Homes

The volume of single-family homes for sale has been so great (2.24 million nationwide as of July 2) according to the National Association of Realtors, that if you don't win the bid on one home, you can potentially acquire one around the corner. By contrast, you can invest a significant amount of time in pursuing a multi-family building, and someone else may have a better offer. So you have to start over, requiring more time and money.

3. House Renters Stay Longer

Single-family home tenants are typically stable families, and more likely than apartment renters to stay in their current homes – for five years or longer, according to Opinion Research Corporation International. (ORCA). “25% single-family tenants plan to stay in place five years or more, compared to one out of five apartment dwellers,” said the report. "Also, families who were displaced by the housing crisis will want and need, we think, similar replacement housing, on a rental basis."

4. Lower Operating Costs for Single-Family Homes

Owners of apartment complexes typically pay the electric company, the gas company, the water bill, the property insurance, and lawn maintenance. For owners of single-family homes, the tenant pays utilities and often does the yard-work. We like that.

(Infographic courtesy of the National Association of Realtors.)

5. Increased Demand for Houses vs. Apartments

More than one-third of all rentals in the U.S. are now single-family homes, according to the Orca study. “From the peak of the housing boom in 2005 until 2010, single-family rentals grew at 21% versus just a 4% increase in total housing units,” according to U.S Census Bureau data.

If you’d like more information on why your should consider investing in a professionally managed portfolio of single-family homes, please contact Harold Willig at 917-209-4452 or harold.willig@springviewinvestments.com

Harold Willig is the Manager of SpringView Investment Management, LLC, which he founded in 2012. Mr. Willig also served as HFZ Capital Group’s Chief Financial Officer, and was responsible for the oversight of HFZ's Finance and Accounting team. He has over 16 years of finance and accounting experience. Mr. Willig also ran a consulting practice and provided valuation, analysis, and transactional support services to multi-billion dollar real estate companies. Previously, Mr. Willig served as the Senior Controller and Vice President of Financial Analysis and then the Chief Financial Officer of the Athena Group, a multifamily development company and fund manager.

This post does not constitute investment, tax, legal, or real estate advice. It is not a recommendation or an offer to buy or sell. No warranties implied. Past performance does not guarantee similar future results.

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