Who has achieved financial freedom owning only SFHs?

Question

Listening to various podcasts, it seems like the typical playbook that many successful investors follow is to start off buying single family homes, move on to 2-4 units, and eventually 1031 or pull out equity and get into bigger multifamily deals.  This makes sense, but many times while researching properties I will come across a single investor or LLC that owns 30+ homes in my town, so I know some people out there are sticking with buying SFHs, or at least didn't sell them all.

Assuming $400/mo in passive cash flow, you would need to own 22 homes to gross $100k a year. My questions to those who have achieved this level of success are:

Why did you choose to stick with single family homes?

If you had to start all over again today, would you still choose SFHs or would you focus on other property types? Why or why not?

Thanks!

Bill B. · Answer

It took 2 years and 5 properties to get to basic income. ($30-40k. Which is more then it sounds like as it’s tax free after depreciation.) it took 4 years and 10 properties to get to $100k, still tax free after depreciation.

I bought a new primary and a new rental every year. I then moved out of my primary and made it a rental and bought a new primary and rental

I went slow and quit when I had enough. I’m a pretty basic Midwestern kinda guy. This was 10 years ago before real estate investing became cool. I didn’t know anyone that owned one rental.

If you buy a new primary every year (for the lower rate and if needed, lower downpayment) that alone will get you there. If you can only do that every 2-3 years, so what, it takes you 20 years instead of 40 like most people. And if you continue to work during those 20 years you end up with at least twice as much. (And hopefully a “rental” in Hawaii, or the USVI, or somewhere you always wanted to retire.)

Anthony Gayden · Answer

@Matthew Wilson

I’m married and have a daughter. Still I have done that strategy. I bought a primary residence with 3.5% down, lived in it for a year, then moved out and turned it into a rental. The next house I did the same thing with 5% down conventional, but I stayed there 2 years. I did this a third time with 5% down conventional and stayed there 2 years as well.

Having a family isn’t a reason not to do this strategy.

Nicole W. · Answer

I had a 10 unit apt and some SFR. I have a condo but don't prefer them. The apt was very old and though I kept upgrading it over time it started needing a lot of major work so sold it and bought SFRs with it. I was able to leave a 9-5 job and live off the income from it all now. It took me around 24 yrs though to get to a really good place with it. I could've done it a lot faster had I been more focused on the RE business vs my job. Hope that helps. I also don't borrow for anything that is not an asset. I have no liabilities.

Dennis Wayne · Answer

Yes it’s totally possible but if your going to be doing that strategy you’ll want to use lease options on those homes . I like my apartment houses but Single family home is the number one way to build wealth in my view . There’s just so many ways to make money and exit on them . All of that relies on buying it right though

Deanna O. · Answer

SFR is much more flexible. Advantages are you can generally afford one house more easily than a multi, easier to finance, generally more sought-after and whole categories of issues are non-existent (ie noise of upstairs neighbor complaints). Disadvantage is that they are more work per door (owning 3 SFR is MUCH more work than owning a triplex). Definite advantage when it comes to selling later in life though, in that you can downsize as you need the $$$.

Dennis Wayne · Answer

I should note the way I was able to buy them up was without using banks and paying cash with a partner . It allowed me to accumulate many in a couple years it was also a benefit to buy most of them for under 10k . If I was working with a bank and buying off the mls I’d probably own one house lol fortunately I don’t do things like others

Bill B. · Answer

@Matthew Wilson

It’s not going to be a primary home mortgage if you don’t live there. But that just means you need a larger downpayment and pay an extra .25 to .5% interest. You can tap your home equity for the downpayment if that’s the issue. Don’t let the slightly higher rate stop you. There are lots of reasons for lenders to tack on higher rates, that’s just one of them.

Dennis Wayne · Answer

Wendy pattin  has good books on creating these , it’s how you get the best Roi without landlording headaches .. it would take me an eternity to explain the process unfortunately

Matt W. · Answer

Yeah I wish house hacking every year was an option, however my wife and 2 young boys would not appreciate it! Before I got into real estate investing and had kids, my wife and I both had good W2 income and purchased our "forever" home as our first home. It has appreciated a lot so could be a good source of equity. Is there any way to not break the law yet stay living here, but still get a mortgage that is considered our primary residence to buy investment properties?

Matt W. · Answer

Dennis, can you elaborate on how you set up your lease options?

Who has achieved financial freedom owning only SFHs?

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