The SFH wealth myth, and why I still own some anyway
I've been doing this for thirty years. Houses, commercial, development. I still own single-family. But I want to be honest about what they actually do and don't do.
Here's the honest math on why SFH is a hard road to actual wealth:
Supply caps you early. You're fishing from the same pond as every retail buyer in the market. You can't manufacture deal flow at scale the way you can in commercial.
Volume doesn't compress. Ten houses isn't scale, it's ten of everything. Roofs, HVACs, water heaters, tenants. The overhead multiplies rather than consolidating.
Real underwriting has real costs. If you're doing it right, title, inspection, rent comps, insurance quotes, tax history, you're spending time and money on deals you won't close, and that cost belongs in your acquisition math.
Insurance and taxes are structural drag. In Texas, both have moved hard in recent years. Your three-year-old pro forma is probably fiction.
Maintenance is constant and lumpy. Minor stuff never stops. Major stuff, foundation, roof, HVAC, hits you all at once when you can least absorb it.
Vacancy math is usually wrong. One month empty on a house producing $200/month in cash flow is six months of income gone, plus turnover costs.
You don't control appreciation. You're riding the market. When you exit, the IRS is there.
Debt service eats the margin. At current rates, on a typical financed SFH, your tenant is building equity and you're managing the gap.
Management is never actually passive. Good management costs 8-10% plus fees plus oversight. Bad management costs your tenants and your property condition.
I still hold SFH because the right houses, bought right, offset carrying costs and tax exposure on larger commercial deals. That's their job in my portfolio. Not leading it, supporting it.
The place where the math actually scales is commercial: projects where you control rent, value creation, and exit on your timeline. That's where the real compounding happens.
Happy to dig into the specifics of either side of that equation if it's useful.