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This content is for informational purposes only and is not intended to provide legal or financial advice.
In 2020, statistics tell us that single dads represented the main householders in 6.9 million families in the United States. These numbers are significant because they tell us a far different societal story than where we were just a couple of decades ago.
Interestingly, the profile of today’s single dad also gives us a far more optimistic picture of single parenthood than we may typically have. Research out of the Institute For Family Studies reports
- Most single fathers are divorced fathers, but the percentage of never-married fathers has been increasing.
- Most single fathers tend to be older and more educated than single mothers
- Most single fathers tend to be better off financially than single mothers.
- That children who are brought up in single-father families fare as well as those in single-mother families.
Single fathers face all the same problems that single mothers face, including childcare and the ability to balance home life with work life. Some single dads, especially those who want to spend more time at home with family, look toward real estate investments and income-producing opportunities that allow them the optimal work-life balance while offering financial freedom. Real estate investing has offered many single dads the ability to do this while spending more quality time with their families.
#1. Starting At Square One
The first step to real estate investing is appreciating the costs and responsibilities of homeownership itself. This means that embarking on owning your own home, understanding the physical and financial responsibilities of homeownership, home maintenance, and the costs that are associated with it give you a ground floor, real-time education and knowledge of the costs and responsibilities surrounding real estate ownership. For many, renting out their first home when they are ready to move up to a new one is their first experience as a real estate investor.
#2. Look Closely at Your Finances
At the same time, understand your own finances and where you can stop financial leaks. Budgeting for yourself and your family first is foundational to understanding larger budgeting projects, like investment properties.
Paying down debt and saving as much toward a down payment as possible puts you in a good financial position and trains you in financial self-control. While we live in an age of excess, there is also a large counterculture movement toward frugality and early financial freedom. There is a lot to be learned from these people, many of whom are retiring in their 30s while raising families. Putting your financial goals first serves all good investors, whether they are first-time or seasoned real estate investors.
#3. Investing in Real Estate Investment Trusts
Investing in real estate investment trusts, or REITs, without the physical encumberments of owning single pieces of property can be a viable way to invest in real estate. REITs are companies that own portfolios of commercial real estate holdings and sell shares of their investments to investors much the same as mutual funds do.
While REITs can be good investments, their value is subject to the real estate market and how much their properties are worth at any given time. Many REITs are sold like a stock while others aren’t traded publicly. New investors should do their research, and understand the potential volatility and risk before investing in real estate investment trusts.
#4 Starting Off With a Small Rental Scenario
When you want to invest in physical income-producing real estate, practice makes perfect. Renting out a room, buying a small condo unit and renting to an older couple, getting your feet wet and working through the nuts and bolts of being an investor and landlord can help you work through the real-life issues and help you make important decisions about your real estate investment future without much capital expenditure. Understanding cash flow and the costs involved in maintaining a rental unit are critical lessons to learn at the very outset.
#5 Investing in Short-Term Vacation Rentals
One of the ways that many real estate investors generate passive income is by buying and renting out income-producing vacation rental properties. Most of us have seen and used Airbnb and other platforms and appreciate their ease in offering short-term rentals to people who are looking for vacation lodging. If you have money to purchase a good quality income-producing short-term vacation rental property, these may offer good investment opportunities and income as well as doubling as a second home for you and your family.
But you want to understand the costs of owning and maintaining a short-term rental where people are in and out in a matter of days or weeks. This can put a lot of wear and tear on the property and furnishings and may mean that you need to be available 24/7 for emergencies if you don’t choose to hire a property manager. Furthermore, these platforms are not low-cost, so you will have to make that up in extra fees to offset the cost of the platform as well as your cleaning costs and applicable lodging taxes.
#6 Investing in Longer-Term Annual Lease Rentals
Longer-term annual lease rentals ensure that you have the ability to vet your tenants and have someone occupying the property annually, if not longer. While lease rentals offer good passive income, the term passive can be a misnomer. While your property may generate recurring income with little effort, the very nature of real estate is that it needs constant repair and maintenance. As a landlord, you will need to find quality tenants and be on call for emergencies.
Challenging tenants can not always be determined through a background check. Unpaid rent, damaged areas of the home, and other problems can lead to disputes and expensive repairs. Removing a tenant can be legally complicated and emotionally taxing. An empty property can mean that you are paying taxes, utilities, insurance, and other costs out of pocket.
But in a good real estate market, you are not only offsetting your costs with recurring rental income, you are building equity, while deducting expenses and depreciating the property over time.
#7 Trying Your Hand at Home Flipping
If you have time and good handyman skills, flipping homes that have good bones but are in a state of minor disrepair can be a good option. Buying at a reduced price, investing sweat equity and some hard physical work, then selling for a profit offers investment opportunities without the long-term commitment to a piece of property.
But there are downsides to real estate flipping that need to be considered. If you don’t have much experience in home renovation, you may find yourself subcontracting the work, which will significantly eat into your profit. Furthermore, the time you are holding the property between purchase and sale, you are also paying any costs associated with the property, including taxes, insurance, utilities, HOA costs, or any other costs related to the house. You will also want to consider the impact of any short-term capital gains when you sell the home.
What About Financing?
Whenever you are investing in real estate, you may find that getting the financing you need is one of your biggest hurdles. Traditional banks do not necessarily side with you. Real estate investors often need to look at alternative forms of financing instead of conventional mortgage loans. One of your best resources will be a savvy provider of non-qm loans who has access to many different alternative lenders, so you can choose a lender that works best with your financial scenario.
Giving You Quality Time With Your Family
One of the greatest advantages of real estate investments for single dads is that it creates an income stream that allows you incredible flexibility and work-life balance so you can spend more time with your family and the ones you love. Whether you buy a second home to use as a short-term vacation rental or you devote yourself to renovating and flipping homes in your area, it allows you to be the boss and call the shots when it comes to your important time as a dad.
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