I am looking to buy a single family home in a town where there is a lot of comparable apartment units for rent on Craigslist that are slightly cheaper then I could rent a house out for. Could this be a problem or would I be catering to a completely different type of renter with my SF?
I have a SFR which I rented for the last 35 years, and yes, it's two separate type of renters.
At first, my SFR rented for a little more, but in recent times, it's rented 10% below market, which is the same as 3BR apartment at local apartment complexes. I often ask renters what else they looked at, and many told me they looked at 3BR apartments at apartment buildings.
Renters for my SFR, which I prefer are families with small children. They love having a back yard where their children can play. Originally I didn't include landscaping, I now do, but families I rent to don't mind doing it because they use the yards.
The other type of renters are single roommates, 2 or 3 girls, or guys, and a 3BR is affordable either way. The only problem is with their social lives, they have no need of the yard, so it's really a nuisance. In fact new apartment complexes now include health clubs , gyms, swimming pools, while costing a little more, is something useful, compared to a beautiful lawn they couldn't use, but a nuisance if I charged for it by not including mowing. I have rented to singles when I didn't include mowing where neighbors called the town to complain about foot high grass. In fact when I owned my first SFR, I bought a mower, did my own lawn for a few months before hiring a landscaper because I either do the lawn, or miss out on many social events on the weekends. And if I try to mow early on Saturday mornings, when I have somewhere to go, neighbors would yell and scream.
Singles when they have a choice would choose my SFR if they plan to hold frequent gatherings, since the driveway can hold 4 cars, being a corner lot another 6. Three BR apartments at apartment complexes nearby only has 2 parking spaces per unit, A neighbor who lives down the street but rented rooms to singles. His single tenants would have weekend card parties, use up the parking spaces in front of my house, and my tenant threaten to call the town complaining about his doing an illegal rooming house, defined as having 3 unrelated parties sharing the house.
I hold open houses when I rent, and when single roommates come, I tell them they have no lawns to mow and snow to shovel at apartment complexes. How's that for honesty? While I paint and clean before renting, many SFR landlords do not, but they do so at apartment complexes, and they also have staff on duty to do repairs and other chores.
These are the issues between apartment buildings and SFR's in my neck of the woods.
@Nick Seginowich Some people prefer to rent SF because of the privacy and/or personal space, yard etc. Others prefer to rent apartments for simplicity or because they enjoy the community and amenities. Everyone is different and at the end the day, these are two completely different asset types. In my experience renting out condos vs single-family, I found that I could always get a premium for a single-family home vs a condo. Best of luck!
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