The Best Types of Rental Properties

The Best Types of Rental Properties

As a real estate investor, it’s important to offer desirable rentals to generate consistent cash flow from buy-and-hold investments. Since recent data shows that 14.1 million households (42 million residents) live in single-family rentals (SFR) and 24.7% of Millennial renters expect to always rent, it’s safe to say that you can generate rental income from this asset type.

While other property types like condos and apartment buildings are also great for rental property investing, single-family homes are more accessible for first-time investors. Moreover, they are easier to manage, renovate, and market.

What types of rental homes are more desirable for residents, and which ones leave something to be desired? Here are some of the best property types that landlords should add to their portfolios.

Best Rental Property Types

To ensure that you get long-term tenants, these single-family home styles typically make the best investments.

• Ranch
• Townhouses and Duplexes
• Spit Foyer or Split-Level
• Colonial
• Cape Cod

If you plan to buy rental properties, check out these home model types. Your real estate agent can customize an MLS search to include new listings that include specific home styles, like ranch, colonial, condominium, townhouse, etc.

Residential Rental Tip: Offer Affordability AND Value

The ideal rental has two features in balance: a reasonable price and that meets its value. If property owners offer just affordability without value, tenants will leave. Conversely, if you offer value but the rental isn’t affordable, people will also go elsewhere.

To succeed as a property investor, price your units fairly compared to the market’s competition. Meanwhile, prioritize safety, convenience, and functionality. The cheapest option doesn’t always win here, nor does the most expensive (unless you’re serving a niche luxury market). Consider these examples:

• When a rental house is cheaper than others but is located in an unsafe neighborhood and poor condition, renters will more than often look for something better, even if it has higher rent. This is a case where a lower monthly rent isn’t enough to entice renters who value safety and amenities.
• When a rental home costs too much for its location and condition, renters seek out similar properties listed at the average market value. For instance, a single-family rental listed for $2,400 will almost always lose to a property of similar size and location if it’s listed for $2,200.
• When a rental home lacks an amenity that comps have, renters will flock to the competition. For example, if a townhouse that costs $1,800 per month doesn’t have a washer/dryer in unit but one across the street does for the same price, then the prospective renter will most likely pick the one with the washer/dryer in unit.

Meeting the ideal standards of fairness so that the resident gets what they pay for will ensure that your property remains occupied. The best way to stay within this golden mean is to investigate the local market’s average rent. Any property you acquire should be priced around this average to be the most competitive and visible.

The Best Types of Single-Family Home Rental Styles

A home’s style directly influences its marketability and, therefore, its value. By selecting more affordable styles located in safe and convenient locations, you can continue to offer desirable rentals to local residents. Different types of houses offer unique advantages. Here are the best ones for landlords who want to buy and hold real estate.

1. Ranch

When it comes to affordability, this one-story single-family home costs the least among detached homes. Since it’s easier to buy in cash or afford for more home buyers, it’s an excellent starter property for novice landlords. It’s also an excellent addition to any seasoned investor’s portfolio because of how fast these gems fly off the shelves.

Ranch homes aren’t just affordable; they are the ideal property for young families, seniors, and anyone else who doesn’t want stairs in their house. Ranch-style homes can be left as no-frills affordable rentals or be enhanced with conveniences like an attached garage, a front porch, a kitchen upgrade, fresh carpets, and professional landscaping in more high-end areas. Just remember not to over-improve any property when the renovations don’t add to the property’s market value.

2. Townhouses and Duplexes

Multifamily homes like attached homes are also popular rentals in the real estate market. These attached or semi-attached homes can be even more affordable than ranch-style homes if they are moderately sized. Townhomes can be duplexes, triplexes, or even fourplexes, which are cheaper to build than detached homes. These can offer more bang for a renter’s buck since they can get larger properties for less than renting a detached home.

The drawbacks include noise bleed from neighbors, but they also get the convenience of less (or no) yard upkeep. Often, these homes are located in communities where yard care is part of the package, which is another perk.

3. Split Foyer or Split-Level

According to a recent NAHB survey, less than  3% of millennials are interested in becoming homeowners of a split foyer property. However, these houses are seriously underrated gems. With the right updates such as enhanced curb appeal and additional windows, the extra space and versatility of the split foyer house can become an excellent investment.

Since they were more affordable to make than other house styles, they boomed in popularity in the 1970s. In subsequent years, their popularity dwindled, but many remain to this day that are in good condition. Right now, you’ll find many split foyers on the market that are listed lower than more popular styles like colonial or ranch styles.

However, this is an excellent opportunity for a landlord who wants to offer a spacious, versatile, and affordable rental. Check out your specific market’s demand for rentals and see how easily (and for how much) split foyers lease, and if the stats check, snag this home type in your portfolio!

4. Colonial Homes

Colonial homes are among the most popular architectural styles in recent years for their aesthetic curb appeal, practicality, and spaciousness. They come in many variations, from farmhouse style to contemporary home styles and closed and open floor plans. Each has its own charm and appeal to different renters.

This style has at least two floors and a garage and is typically located in well-established move-up home neighborhoods. Colonials are popular with families and multiple roommates because of the spacious living rooms, staircases, and extra space for rooms like home offices. Colonials can also have desirable aesthetics like bay windows that add to curb appeal. 

For these reasons and more, colonials are also highly marketable when it’s time to sell.

5. Cape Cod Homes

Cape Cod houses have an evergreen appeal and can be quite diverse in their structure. It’s best known for its steep gabled roof and central chimney. Cape cods can be single-story or two-story homes with additional features like a garage, front porch, fireplace, and patio.

Many Cape Cods originate from the mid-20th century, but you can also see features from this style integrated into ranch-style homes and other contemporary structures. Older Cape Cods are smaller than modern versions, which makes them more affordable and ideal to use as rentals. This also means they are more likely to be in established neighborhoods.

Other Home Styles for Landlords

If you want to talk about single-family home styles, we can be here all day. Over the years, builders created many beautiful architectural styles that are still around us. With an expert eye, you can find hidden gems like well-maintained Queen Anne, Georgian, Tudor style, and Victorian homes that can also be marketed to residents.

However, the more unique and historical a house becomes, the more expensive it is to maintain. This is due to the rarity of the building materials used to maintain the unique character of historic buildings. However, if you can find a well-maintained home from another era, you may find one within your budget to lease to residents.

After all, your investment journey is unique. You should not feel restricted by the list of most popular rentals if you find a style of home that you’d love to buy, maintain, and turn into an investment.

Why Choosing the Right Rental Properties Matters

A great investment strategy involves picking the right rental units that will appeal to the majority of renters. Since single-family rentals are among the most popular and profitable type, getting the most desirable types of SFR can help you in a variety of ways.

• Maximizes occupancy rates. Having a low vacancy rate keeps your rental income flowing!
• Shorter fill times. High demand properties get new tenants more quickly.
• Longer stays. Not only do they fill more quickly, but they are more likely to have long-term leases.
• Qualified tenants = less eviction. When people are responsible and pay their rent, they are far less likely to be evicted due to nonpayment.
• Better return on investment. Homes that are occupied consistently with qualified tenants are just better for landlords, promising the maximum ROI instead of spotty, inconsistent cash flow.

🏠 Tip: Want an even better return on investment? Then hire a property management company. A property manager takes over all the tasks landlords would usually handle, such as finding qualified tenants, marketing the property and pricing it right, moving tenants in and out, and handing all payments and deposits. If you choose a full-service property management service through Marketplace Homes, we also offer tax help so that you can maximize your tax deductions to get the most out of your investments!

Find Your Ideal Rental Home Style with Marketplace Homes

Picking the right architectural style at the right market value can maximize your portfolio’s marketability. Your dream home or investment may be coming on the market right now. Our team of real estate professionals is ready to help you meet your goals. Contact us today to schedule a call or send us a brief message about what kind of real estate investment looking for.