SFR Real Estate: One House, One Tenant, One Lease, and Why That Simplicity Is the Point

SFR stands for single-family rental, a detached house with one unit leased to one tenant or household, as opposed to multifamily properties with multiple units under one roof. There are roughly 16 million of them in the U.S., making SFR the largest segment of the rental housing market.

I own eight.

Not because I ran some optimization model that pointed me toward single-family. Because the first one was a 3-bed/2-bath in a B-class neighborhood that I could finance with a conventional mortgage, manage from my phone, and explain to my wife in under two minutes. It rented in nine days. The second one was similar. By the third, I had a system. By the eighth, I had a portfolio that generates enough monthly income to cover my family's housing costs, and the operational complexity is roughly equivalent to managing a busy email inbox.

That's the SFR pitch in practice, not in theory. Here's what eight properties have actually taught me.

Why SFR Works (and Where It Doesn't)

Financing is dead simple. SFRs qualify for conventional residential mortgages, 15-25% down, 30-year fixed, rate-shop between five lenders in an afternoon. Try that with a 12-unit apartment building. You're in commercial loan territory: stricter terms, shorter amortization, balloon payments, personal guarantees, and a lending officer who wants your last three years of tax returns, a personal financial statement, and a global cash flow analysis before they'll return your call. For your first 1-10 properties, residential lending is faster, cheaper, and more forgiving.

One tenant means one relationship, managing a rental property with a single tenant is as simple as real estate investing gets. No common area disputes, no shared utility billing nightmares, no "the guy in 3B is smoking on the patio again" texts. When something breaks, I call one person. When rent is late, I follow up with one person. The management complexity per dollar of invested capital is the lowest of any rental property type.

Your buyer pool is massive. This is the one nobody thinks about until they sell. List a $250,000 SFR and your buyer pool includes first-time homebuyers, families upgrading, downsizers, investors, and 1031 exchangers. List a $250,000 fourplex and your buyer pool is investors. Period. More buyers means more liquidity, faster sales, and, in most markets, a price premium over equivalent income-producing multifamily.

Tenants stay longer and take better care of it. Average SFR tenancy runs 3+ years versus 18-24 months for apartments. Families want yards, garages, school districts. They treat the property like a home because, for them, it is one. My longest-tenured tenant has been in place for six years. I've spent $2,400 total on maintenance in that unit over that period, less than $35/month.

The weakness nobody sugarcoats

When your one tenant moves out, you have 100% vacancy. Not 75%, not 50%. Zero income until you fill it. A fourplex with one vacancy still collects three-quarters of its rent. An SFR with a vacancy collects nothing.

This is the single biggest structural risk of SFR investing, and it's why experienced SFR investors always do two things: maintain a 2-month vacancy reserve per property, and scale to multiple properties as fast as capital allows. Portfolio diversification solves the single-tenant risk that individual SFRs can't.

SFR vs. Multifamily: the Honest Trade-Off

That last row matters more than most people realize. SFR values are driven partly by investor math (rent, cap rate) and partly by the owner-occupied market (school districts, curb appeal, "does this feel like a home"). When a market appreciates, SFRs often appreciate faster than multifamily because the demand pool is larger. My properties in suburbs with good schools have appreciated 4-5%/year. Similar-vintage multifamily in the same zip codes: 2-3%.

What I Look For After 8 Deals

3+ bedrooms, 2+ bathrooms. The rental sweet spot. Two-bed units attract singles and couples who move more frequently. Four-plus bedrooms are harder to fill and more expensive to maintain. Three-bed/two-bath is the Toyota Camry of rental real estate, not exciting, endlessly practical, always in demand.

Built after 1980. My pre-1970 properties have cost roughly 3x more in maintenance than my 1990s builds. Older homes have charm and lower purchase prices, but they also hide outdated electrical, cast iron plumbing, and foundations that are one hard rain away from a $15,000 repair. I've stopped buying anything built before 1980 unless the bones have been completely redone.

Good school district (top 30% locally). Even if tenants don't have kids. School ratings correlate with neighborhood stability, tenant quality, and long-term appreciation. I've never had a property in a good school district sit vacant more than 14 days.

Rent-to-price ratio of 0.8% or higher. Below 0.8%, cash flow math rarely works at current rates. Above 1.0%, you're probably in a rougher neighborhood with higher vacancy, turnover, and delinquency. The sweet spot for SFR cash flow in 2026 is 0.8-1.0% in a B-class neighborhood. For more on this, see our breakdown of the 1% rule.

No HOA, or HOA under $100/month with investor-friendly bylaws. HOAs add cost, restrict your rental rights, and create headaches. I've walked away from otherwise strong deals because the HOA prohibited leases under 12 months or required board approval for tenants. Read the CC&Rs before you run the numbers, not after.

Four Ways to Play SFR

Buy-and-hold. Purchase, rent for 10-30 years, collect cash flow while tenants pay down your mortgage. Target: $150-300/month cash flow, 8%+ cash-on-cash return, DSCR above 1.25. Works best in stable markets with consistent rent growth. This is what most of my portfolio looks like.

BRRRR. Buy distressed below market, renovate, rent at market, refinance to pull out capital, repeat. Target: all-in cost at 70-75% of after-repair value. Done right, you recover 100% of your capital and hold an asset with infinite cash-on-cash return. Use our BRRRR calculator to model deals.

Value-add. Buy with below-market rents or deferred maintenance. Make targeted improvements: kitchen, bath, curb appeal, raise rents to market, and hold for increased cash flow or sell at higher valuation. The middle ground between buy-and-hold and BRRRR.

House hacking. Buy an SFR with a basement apartment, ADU, or extra bedrooms. Live in part, rent the rest. Covered in depth in our house hacking guide.

Market Selection: Where the Numbers Actually Work

Not all markets support SFR math. The ones that work share four traits:

Population growth (people moving in = housing demand = rent growth), job diversification (one-employer towns collapse when the factory closes), landlord-friendly laws (Texas, Florida, Georgia, and Arizona allow faster evictions than California or New York), and affordable price points (you need SFRs in the $150,000-350,000 range to hit reasonable rent-to-price ratios).

Markets I'd look at today: Phoenix, Tampa, Dallas, Atlanta, Nashville, Charlotte, Indianapolis, Jacksonville. Markets I'd avoid for cash flow SFR: San Francisco, Seattle, Los Angeles, New York, Boston, Denver. You can build wealth through appreciation in those cities, but cash flow SFR is a different strategy with different math.

Tracking a Portfolio of SFRs

An individual SFR is simple. Five of them scattered across two states is a spreadsheet nightmare.

You need to track actual rent collected versus market rent, using a comparable market analysis: across every property (are you leaving money on the table?), vacancy rates by property, maintenance costs by property, NOI and cash-on-cash by property, and portfolio-wide aggregates: total NOI, average occupancy, weighted DSCR. One of my properties drifted $135/month below market over 18 months because I hadn't pulled comps since the original lease. I found it when I finally loaded everything into Operator. Across my eight properties, the portfolio-level rent gap was costing me roughly $3,200/year in cash flow I didn't know I'd lost.

Operator monitors all your SFRs against live market comps. When rents in your zip code move, you know within days, not at lease renewal when you've already lost months of higher rent. $25/mo.

FAQ

What does SFR mean in real estate?

Single-family rental. One detached house, one unit, one tenant or household. It's the most common residential investment property type, roughly 16 million SFR properties in the U.S. owned by individual investors and institutions.

Is single-family rental a good investment?

For buy-and-hold investors who want simpler operations, longer tenant retention, and the broadest possible exit strategy, yes. SFRs offer conventional financing (15-25% down, 30-year fixed), tenants who stay 3+ years on average, and the ability to sell to either investors or owner-occupants. The main structural risk is binary vacancy, when your one tenant leaves, income drops to zero until you fill the unit. Mitigate this by maintaining reserves and scaling to multiple properties.

How do you analyze an SFR investment?

Calculate monthly cash flow (rent minus all expenses and mortgage), cash-on-cash return (annual cash flow divided by total cash invested), and DSCR (NOI divided by annual debt payments). Target $150-300/month cash flow, 8%+ cash-on-cash, DSCR above 1.25. Verify rent estimates with local comps, not listing agent projections, and budget for vacancy (8%), maintenance (5% of rent), and CapEx (5-10% of rent). Use a rental property calculator to run the numbers before making any offer.