Are you ready to get started in rental management Birmingham? Deciding to purchase a single-family home as a rental property is a wise investment that can earn you profits for years to come. At Specialized Property Management Birmingham we help rental owners just like you figure out all the details they’ll need to know before investing. Unlike other property management companies that manage a complex array of multi-family properties, at SPM Birmingham our focus is on single-family rental properties. We believe single-family homes are a stable investment, and the “buy, flip, and sell” model is not as effective or lucrative as renting out a single-family residence (SFR).
Why Should I Invest in a Single-Family Home?
Today, more people are choosing to rent instead of buy a home. In Birmingham, 54% of people rent their homes, compared to 46% who own. This is in part due to the effects of the 2008 housing collapse.
“The great recession of 2008 has left a great impact on the housing market. As a result, renting has skyrocketed in popularity across the nation. Data show that the total number of households in the United States grew by 7.6 million between 2006 and 2016.”
– from homeowners vs. renters statistics
And it’s not just young, unmarried college students renting anymore either. As experts in residential property management Birmingham, we are seeing many families choose to rent instead of own.
“Rental living often conjures up images of single people and unrelated roommates. Singles are indeed the most common type of renter, reflecting both their growing share of all households and the fact that renting often suits their need for less space at a lower cost. But contrary to the stereotype, families with children account for nearly as many renters as single persons. In fact, the share of families with children among renters is higher than the share among owners.”
– from the Joint Center for Housing Studies of Harvard University
In short, when you buy a single-family home that you intend to rent out to tenants, you are meeting a demand that’s already there and you can make a tidy profit while doing so. Many families enjoy renting a home instead of an apartment or a condo because single-family homes tend to be in a quiet neighborhood and provide amenities like a garage and a backyard. When you invest in a single-family home, you can also expect to have a higher quality of tenants with less tenant turnover.
Single-Family Homes = Less Tenant Turnover in Rental Management Birmingham
In many apartment buildings, tenants come and go quickly. Some may only need to rent for a few months, while others break their lease after just a few weeks due to a change in their job or school. With most single-family homes, however, you won’t experience the same type of tenant turnover.
When a family moves into your rental property, they are more likely to see it as a long-term investment, staying anywhere from one to four years or more. Because of their long-term mindset, they’ll take better care of the property and treat it as if they were the owners. When maintenance issues arise, they’ll want to tell you about it quickly so they can get back to their daily routine.
Say a family with three children has decided to rent your home and they end up staying for three years. Not only will the property be well taken care of while they’re there, but you’ll also save money, time, and hassle not having to market the property or show it to potential tenants during that time period. Tenants that stay longer also allow you to cultivate a relationship with them, so you usually experience more streamlined communication and cooperation with the tenants in general.
Residential Property Management Birmingham: Single Family Homes Increase in Value
When you buy a brand new car, it immediately decreases in value the second you drive it off the lot. Not so with single-family homes. If you buy a SFR in a neighborhood where the home values are appreciating, you’ll be able to charge more for rent and increase your profit margin with each year that passes. Once you are familiar with the home prices in the neighborhood where your rental property is located, you can also look for opportunities to purchase a second home when the market prices are lower.
Single Family Homes Give Tenants More Freedom
“A 2012 Fannie Mae survey reveals many of the reasons some households favor renting over owning. More than half of the renter respondents considered renting a better choice for living within a budget and having less stress. The other common reasons cited for preferring to rent are that it is the best decision in the current economic climate, allows one to live in a more convenient location, and provides more flexibility in future decisions.”
– from the Joint Center for Housing Studies of Harvard University
As proven in the above survey, one of the major attractions of renting is the flexibility and freedom it gives people. When tenants choose a single-family residence, they can enjoy the yard, garage, and extra space without feeling the burden of a mortgage or the responsibility of all the home repairs.
Selecting a Single-Family Home
Many landlords want to earn a profit, but they end up buying an older property that needs a ton of work and renovation, thinking they’ll hire cheap labor and save in the long run. Not only is that not a great business strategy, but many times older, beat-up properties are located in neighborhoods where the home values are decreasing, so once the property is ready to rent they can’t even charge what they’d like to charge to get an ample return on their investment. In rental management Birmingham, when you pick out a single-family home, you have to think about all these factors, including many more. Ask yourself the following questions when selecting a single-family home:
- Is this the right time to buy? Don’t invest in a single-family home if prices are at an all-time high and you can’t afford to cover the rent for even a couple of months. You should pick a home that fits your budget comfortably.
- What neighborhoods do I want to consider? If you live locally and you’re planning to manage the property yourself, don’t pick a home that’s clear across town and takes an hour to get to. You’ll find yourself wishing it was closer when you get those late-night maintenance calls.
- Is the home older? Will it need a lot of repairs? According to the Joint Center for Housing Studies of Harvard University, “Given that older housing is more likely to be inadequate, more than 13 percent of rentals built before 1960 have some structural deficiencies.” Most landlords don’t want to spend all their extra time fixing stuff in their rental property. It’s ideal if the rental home is less than 15 years old because it will save you money on maintenance and upkeep.
- What is the layout of the home? The majority of families looking to rent want a home with at least 3 bedrooms and 2 bathrooms. They want a simple layout and a fenced yard. Don’t purchase a home that has only one bedroom and an unfenced backyard that backs up to a drainage ditch. You’ll have a hard time finding a long-term tenant who wants to stay in that situation.
You’ll figure out pretty quickly which homes are a good investment and which ones aren’t the more you look at, so take your time choosing and don’t rush into anything. Evaluating the pros and cons of each rental home and looking at it from the perspective of the renter can help you decide if it’s worth it. In residential property management Birmingham, remember that the type of property you pick will determine what kind of tenants want to live there and how long your property sits vacant.
How Specialized Property Management Birmingham Can Help You
Now more than ever, renting a single-family home is an attractive option for a large percentage of the population. And with over 30 years of experience in the single-family home property management industry, we believe owning and operating a single-family rental home is a solid investment. Our team has the local expertise to help you pick a SFR that will help you achieve your long-term business goals. We work together with our clients to maximize their profits and minimize their hassles, renting out their home to responsible, quality tenants. We stand above the competition because our proven methods and effective strategies really work.
“I was on the fence about whether or not I needed someone to help me manage my rental homes. After I realized the difficulty of doing so on my own, I turned to specialized Property Management. I got many referrals and I’m so glad I found them. They are true professionals—extremely efficient and courteous. It was a seamless transition and so worth the money. The team is efficient, responsive and pleasant to work with. I would highly recommend them to anyone that is considering a management company. A+”
– Ashley Bryan, Specialized Client
There’s no other rental management Birmingham company who does more for you. Click here for a list of our comprehensive management services! Give us a call today at 205-417-1572!