I was meeting with another Realtor on our team on Friday.  He wanted to discuss buying investment properties sometime in the future as a long term retirement plan.  One of the questions that came up was “what type of property would you buy if you had to do it all over again”.  I had actually answered this question a long time ago when a reader asked “What Type of Property Investment is Best for First Time Investors“.  Now 2+ years and 100′s of properties later, I would have to answer:  a nice single family home.  I have really come to appreciate the simplicity of buying, owning, and managing a single tenant in a single property.

Single family rentals have some great pros:

• More desired by the average tenant than a duplex or apartment, consequently it is easier to rent a single family home.
• Higher rent possible.
• Tenant takes care of all lawn care and snow removal (typically).
• Minimal monthly landlord expenses (usually just water/sewer/garbage).
• Single Family Home tenants tend to be less transient.
• Easier to sell this property in the future to either an owner occupant or investor.
• Problem tenants can’t sour other tenants (unlike multi-family).

Now, there are some drawbacks, but I think they are manageable:

• When the property is vacant, no rent is coming in.
• Capital improvements can not be spread out across a larger gross rent.  In other words, a duplex may generate $800 per month in cash flow versus a single family home that generates $400 per month.  Unfortunately, the roof on the single family house may cost just as much as the duplex to replace, resulting in it taking twice as long to recover that cost.

Ultimately, this Realtor friend is making the right decision to buy an investment property.  The type doesn’t matter, just get in the game.