2023 presented some unique challenges for real estate investors. But as much as we can bemoan rising interest rates and stubbornly high property prices, the current market – and the market we’re likely to see in 2024 – has a lot going for SFR (single-family rental) investors.
Remember: your success in this business isn’t decided by the sway of the market. It all comes down to your fundamentals and a willingness to adapt your strategy to suit your needs under the full gamut of market conditions. Including...remembering that time in the market matters more than timing the market. Just getting in, getting started or getting growing is enough to put an SFR investor ahead of the masses who are waiting for big shifts and changes before making their next moves.
There are far more than three reasons SFRs work in today’s environment – but we have a few points we want to focus on here. If you’re a current real estate investor, let this encourage you. If you’re thinking about investing for the first time, let this inspire you.
And no matter who you are, we hope it will help you think critically about your wealth-building options.
3 Reasons the Market Secretly Favors SFRs
Reason #1 – High Renewal Rates
At the heart of success for SFR properties, among other things, is resident retention. Securing and keeping excellent residents maintains steady cash flow and helps preserve and protect your investment. Generally speaking, the quality of the property and the property management, alongside rental rates, is what incentivizes lease renewals.
In current market conditions, however, rental residents are further incentivized to stay put. For one, homebuying is increasingly out of reach for people who don’t already own property. Additionally, a lack of inventory and a highly competitive rental market makes finding a quality rental that suits one’s needs has grown more difficult.
Because of this, residents are more likely to stick with a good SFR than ever. Combined with traditional resident-retention tactics, investors are likely to see increased growth and stability in rental income.
Reason #2 – Satisfying the Homeowner Itch
Both SFRs and BTRs offer something traditional multifamily housing does not. SFR/BTRs tend to be of a far higher quality than apartment units. They also typically offer larger square footage, private outdoor spaces, more storage, and increased privacy.
In many ways, living in an SFR or BTR doesn’t feel all that unlike owning a home...except without the mortgage or the responsibility to fix everything when it breaks.
Due to the market, homebuying demand is increasingly pent up. While renting isn’t a perfect solution, SFRs and BTRs alleviate that pressure by presenting an experience as close to homeownership as possible...without many of the same frustrations. That means more rental demand and opportunities to capitalize on a variety of investment markets.
Reason #3 – It Rewards Patience
This investment strategy rewards patience. While other strategies, related to real estate or a variety of investment assets, are more volatile in these conditions, that’s not really the case for SFRs. We won’t say there haven’t been challenges and uncertainties.
But at the end of the day, the market overall – and SFR buy-and-hold investing – rewards patience.
We know that the real estate market moves in cycles. What currently is will not always be. Buy-and-hold investors aren’t reliant on a specific timeline or for the market to do one thing and not another. Our strategy is one that adapts and flexes as needed.
Ultimately, success comes with a pattern of long-term wealth-building: not short-term gains.
The key in today’s real estate market is to target assets that can weather the fluctuating conditions. Experienced buy-and-hold investors know that they can hold out for the right conditions to make their next move.
We don’t take anything on faith. While these are some of the many advantages to investing in real estate at this particular time in history, they’re not the only ones. And with those advantages also come risks. We urge any investor, whether buying your first property or your fifteenth, to do their due diligence.
Get the right market, the right property, with the right people ensuring your success.
This strategy works, but it’s not a sure thing. We don’t know what the new year will bring, even if we can make some educated guesses. So don’t take our word for it – investigate favor yourself! Learn the fundamentals. Remain disciplined. And, at the end of the day, choose the investment strategy that best accomplishes your goals.
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