Table of Contents

• The Ultimate Guide to Single Family Rentals

  • Your SFR Decision Checklist:

    • SFR Case Study

    • Long Term vs. AirBNB

  • Expert Interview: Daniel Dorfman from Invest With …

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So lets talk about the hottest investment trend amongst 21- 43 year old millennials - single-family rentals or SFRs. This investment categories are changing the game for HENRYs (High Earners, Not Rich Yet) aiming to break free from the paycheck-to-paycheck cycle. With rental prices up 29.4% since 2020 and homeownership slipping out of reach, SFRs offer steady income and a path to wealth. Jeff Bezos is getting in on the action

Here’s some stats that’ll make you think:

Since 2020, rental prices have shot up 29.4%

31% of all U.S. renters are living in single-family homes

And it’s not just a pandemic anomaly: rentals have been steadily increasing over 31% over the last ten years. 

SFR incomes continue to outpace multi-family rental incomes. 

Ready to dive deeper? Check out Edition 152 of Noyack Wealth Weekly below to learn why SFRs could be your key to financial freedom. Let’s get after it!

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Here is the Ultimate Guide to Single-Family Rental Investing for Millennials

What Are Single-Family Home Rentals?
Single-family home rentals are standalone houses that offer more space, privacy, and flexibility than apartments, perfect for families and remote workers. With the rise of remote work and lifestyle changes post-pandemic, these rentals have become a popular housing choice. For Millennials and Gen Z, they provide adaptable living options and a strong wealth-building opportunity for investors.

Are You Ready for SFR Investing? Your SFR Decision Checklist:

1. What’s your why?  Does Investing in Real Estate Align with Your Long-Term Financial Goals?

Retirement: SFRs offer steady passive income and property appreciation, making them a reliable addition to retirement accounts. Unlike stocks, they provide predictable cash flow and stability through market cycles.

Family Financial Planning: SFRs offer ongoing income and an asset that can be passed down, fostering financial security for future generations. Think of including them ina Custodial Family Account.

Portfolio Diversification: Including SFRs adds stability to a portfolio with low market correlation, providing rental income and capital gains that balance risk and support long-term growth​​.

Philanthropy: SFR income can fund charitable donations consistently, or properties can be donated for significant tax benefits. This aligns financial health with personal giving goals, enhancing impact​​.

2. Can I comfortably afford the down payment and ongoing property costs without straining my budget?

Here is a hypothetical case study for an SFR investment. Meet HENRY, a 34-year-old Senior Software Engineer in Dublin, Ohio, making $150,000 annually. He and his wife, Sarah, sought more than just a comfortable income—they wanted financial independence. By investing in an SFR, they aimed to generate passive income, build equity, and secure their future for family legacy or their future retirement

3. Have I chosen a location with strong rental demand, promising growth, and attractive neighborhood features?

According to NerdWallet, these markets have seen the highest growth in rental markets:

Cincinnati: +9.2%

Boston: +8.7%

Louisville, KY: +8.3%

Indianapolis: +8.2%

Providence, RI: +7.8%

Choosing the right location can make or break your SFR investment; here’s how to identify promising spots:

• Research Local Trends: Platforms like Zillow and Redfin can help track market data and price trends.

• Neighborhood Features: Prioritize areas with good school districts, low crime rates, and strong walkability to attract high-quality tenants and command higher rents.

4. Am I prepared to manage the property myself or find a reliable property management company?

Will you manage the property yourself, or outsource management? If choosing to manage yourself, here are some technology options to make that task easier:

Mynd is a real estate platform that assists investors in finding, buying, leasing, managing and selling investment properties. Yardi Breeze and Appfolio are two options that offer cloud-based property management software with many options including automating billing, maintenance and budgeting. Track the sustainability of your investment with a software like Measurabl.

5. Do I have a plan to handle risks like vacancies, maintenance surprises, or tenant issues?

Having a risk management plan is essential for SFR investing. Budget conservatively by maintaining a financial buffer to cover potential vacancies or unexpected repairs—ideally 1-3% of the property value annually for maintenance. For tenant issues, develop a thorough screening process to reduce the risk of non-payment or damages. Additionally, consider landlord insurance for extra protection against significant property damage or legal disputes​​

Pro Tip: Choose comprehensive landlord insurance with dwelling, liability, and rental income coverage. Opt for a higher deductible to lower premiums, ensuring you have savings for it. Bundle policies for discounts and pick insurers with strong ratings. Prioritize specialized policies covering tenant damage and legal fees; consider endorsements like flood or building code coverage for added protection.

6. Am I aware of the tax benefits and potential savings?

Tax advantages are a major draw of SFR investing, particularly through accelerated depreciation. Unlike straight-line depreciation, accelerated depreciation offers larger deductions in the early years, which can significantly lower your taxable income. Here’s why this matters:

• Enhanced Early Cash Flow: Reduced tax bills mean more cash in your pocket for reinvestment or scaling your rental business.

• Offsetting Other Income: These paper losses can offset other sources of income, such as dividends or additional rental profits.

• Bonus Depreciation: Qualifying property types may be eligible for 100% bonus depreciation, enabling substantial first-year write-offs.

• NIIT and QBI Benefits: Income from self-rentals may avoid the 3.8% Net Investment Income Tax (NIIT) and qualify for the 20% Qualified Business Income (QBI) deduction.

Pro Tip: Accelerated depreciation can lead to depreciation recapture taxes when selling the property. Consult a tax professional to ensure optimal tax planning and strategy.

7. Am I committed to holding the property long enough to see meaningful returns and build equity?

Investing in single-family rentals (SFRs) requires a long-term commitment of 5-10 years for significant appreciation and compounding benefits of rental income and mortgage amortization. Choose between steady long-term rentals or potentially higher but variable returns from short-term Airbnb-style rentals.

Final Thoughts: Is SFR Investing Right for You?

Single-family rentals (SFRs) offer millennials and Gen Z a practical path to wealth through steady cash flow and equity growth, aligning with goals-based investing strategies. By defining your financial objectives—whether it's retirement income, financial independence, or diversification—researching prime locations, understanding management options, and planning for costs and tax benefits, you can make SFRs reliable, income-producing assets that support your long-term goals.

Expert Interview: Daniel Dorfman from Invest With Roots 

To help us better understand Real Estate Investing, we sat down with Daniel Dorfman, Co-Founder of Invest With Roots (a Reg A+ REIT). Daniel is an innovator aiming to transform the landlord-tenant relationship by leveraging residential income to generate strong investment returns while benefiting the community. Check out our interview with Daniel below 👇:

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