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Criteria for Investing in Single Family Homes

Posted by Ken Meyer on Thu, Jun 06, 2013

single family home investing

Many fledgling real estate investors choose to start off small by investing in a single-family home instead of a multi-family or apartment property. In these deals, the investment is smaller, the potential problems seem more manageable and the downside is significantly lessened.

Still, for these deals, the criteria for finding a suitable property are much the same as for larger deals. Here are some things that any real estate investor should examine when investing in a single-family home:

Investigate the Neighborhood

Location is as pertinent to the value of a single-family home as to any other real estate property. While no neighborhoods are intrinsically a bad investment, one should know whether they are trending up or down in value and adjust your offering as warranted. In addition, an examination of the neighborhood will tell you the best places to invest your remodel dollars if that is your intention.

Examine the Property

If you’re a new real estate investor, don’t leave this task to an inspector. As Yogi Berra once said, “You can see a lot by just looking around.” It’s your investment dollars and no one will protect them as well as you.  A personal visit is the best option but, for out-of-town properties, insist that pictures be taken of the most salient features of the house such as the foundation, the roof and appliances.

Understand the “Comps”

The selling prices of comparable houses, known as ‘comps’ in the trade, are one of the best indicators of the value of a single-family property. Of course, every property has its peculiarities, such as amenities, the owners need to sell, and general level of maintenance, however, comps are a great place to start when determining a value.

Find the Best Financial Resources

There are innumerable financial resources available to homebuyers looking for a house to live in. For investors, the situation is not quite as simple as most traditional lenders are not particularly interested in investor loans as they are not backed by government guarantees. Instead, real estate investors should turn to private money lenders. These companies bring investors and borrowers together for any type of real estate deal including single-family homes. These deals offer competitive rates, the same guarantees and complete documentation plus they are a convenient way for both lenders and borrowers to meet their investment objectives. In short, private money lenders are an excellent resource for those investing in single-family homes.



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