Owning rental properties offers investors two key potential benefits. First, they provide a steady and predictable source of income with the cash flow generated from tenants’ rents. Second, they deliver potential diversification for investors because the forces that influence the real estate market are typically different from the factors that affect the stock and bond markets.
Within the real estate market, single and multi-family housing are two examples of the many different types of properties investors can own – single-family rentals (SFR) or multi-family rentals (MFR). To determine which type may be best for you, it’s important to understand the key characteristics, benefits and potential drawbacks of each property type.
Current housing data from the federal government shows demand for rental housing increasing.
So a landlord renting SFRs or MFRs should be able to find tenants and maintain a flow of income from your investment. A number of trends will likely continue to benefit rental property owners.High real estate prices have put homeownership out of reach for many families. For a decade, home prices have continued to climb at much higher rates than wage growth. (See Exhibit 1). That has forced more people to continue renting.
Deciding what type of property is right for you is a personal decision, but there is no question the broader trends at play in the economy today make it a good time to own rental housing. Being a landlord also doesn’t mean you have to get out of bed in the middle of the night to fix someone’s leaky pipes. Rental management professionals can make owning properties much easier so that you can simply enjoy the regular income they generate, as well as the potentially significant capital appreciation that can be realized in today’s markets when properties are sold.
On crowdfunding platforms like Yieldstreet, you still get the potential benefits of an individual investor considering SFR or MFR, without needing the requisite capital, research, and time to buy a property on your own. If you’re intrigued by the market and are wondering if single or multi-family real estate may help benefit your portfolio, consider Yieldstreet’s real estate offerings.
1. Source: Attom Data Solutions, as of Q2 2021, using national median home price (+ percentage gain) and annualized average weekly wage (+ percentage gain) at the fourth quarter of each year, as cited in “Charts Show Challenges to Housing Affordability,” Pro Builder, 1/28/22
2. Source: “Quarterly Residential Vacancies and Home Ownership, Fourth Quarter,” U.S. Census Bureau, 2/2/22
3. Source: “The Real Reasons Millennials Aren’t Buying Homes,” Investopedia, 2/17/22
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