SFR's as rentals??

[Chris Case]

I currently own 2 rentals that are single family homes in good (b class) neighborhoods. Both houses are in the Houston, TX area and are less then 10 years old. I have had pretty good success with both properties and I'm looking to buy a third. I am looking for people's opinion on owning multiple single family homes in good neighborhoods compared to buying older multifamily properties in C class neighborhoods. Pros and cons of both?

[James Park]

@Chris Case,

I am firm believer in owning a portfolio Single family homes is the way to go if you are looking for a truly passive retirement portfolio. When you are buying a multi-family, you are most likely dealing with another investor who knows how to negotiate, which is not the case when you buy SFR investments. You will also have much better quality longer term tenants than you would with apartments or multi-family. SFR Tenants will most likely take care of minor repairs to the home, which is not likely the case if you have a multi-family or an apartment tenant. I try to network with other top commercial brokers in my area, but what I have found out is that none of them own commercial investments themselves for their long term retirement planning, however most of them own a nice portfolio of single family homes and a few own multi-family. They told me that the reason for this is if the economy goes south like the last financial crisis, not everyone needs to rent office/industrial space, or retail, but everyone needs a roof over their head which is why they prefer SFRs and multi-family over commericial.

I say this because I always thought that SFRs are where the newbie investors start and eventually graduate to multi-family, apartments, and commerical. I now realize that I was wrong. My plan today is to start with a nice portfolio of SFRs and will end with free and clear A class SFRs for my real estate retirement portfolio. Most importantly, SFR tenants are very easy to manage. My current tenants probably call me either once or twice a year. You want a tenant who pays you on time, takes great care of your property as if it their own, and never calls you. You can get this type of tenants when you own A and B class SFRs in desirable 9 to 10 rated school zone neighborhoods.