What Investors Should Know Before Dabbling in Single-Family Rentals

House For RentThe demand for single-family home rentals under Section 8 investments in the U.S. would continue in the next 10 years when investors are expected to flock to the market.

By 2030, single-family rentals will comprise around 29 million properties in the overall rental market. While it can be a promising venture, investors should first consider certain factors before dabbling into this property segment.

Strategic Location

Some investors want to venture into single-family housing rentals to diversify their investment portfolios, but that entails more than just distributing your capital in different types of properties. It also requires you to consider other locations to avoid the market swings in a certain region.

If you live in California, it’s better to spread your vulnerability to risk by seeking an income-producing property in other places. First-time investors, in particular, should also learn to minimize risk by adding other asset classes in their portfolio, such as Section 8 investing.

A property manager will be a key factor in this type of investment.

Other Rental Investments

Section 8 housing can be a good fit for your investment portfolio if you think the advantages will outweigh the risks. Since the government shoulders up to 70% of a Section 8 tenant’s monthly rent, it’s possible to raise your rates above the market range.

This is possible since not all landlords are keen on accepting low-income tenants because of special procedures and rules. For instance, public housing agencies will have to inspect your property based on Section 8 standards. Tenant screening will still be necessary even if public agencies already screened them.

Conclusion

More households will likely rent instead of owning houses in the coming years, partly because of high property prices. Like any other investment, you should consider all options aside from single-family rentals. Consult with property management firms to find out the best strategy.