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Single Family Residence (SFR)
A standalone residential property designed for one household, the most common investment property type.
Definition
A single family residence is a freestanding dwelling built to house one family or household. SFRs are the most popular entry point for real estate investors due to wide availability, straightforward financing, strong tenant demand, and relatively simple management. They typically appreciate faster than multifamily properties and are easier to sell. However, SFRs carry 100% vacancy risk — when the tenant leaves, income drops to zero until a new tenant is placed. Most DSCR lenders offer their best rates and terms on SFRs. As an asset class, single family rentals have attracted significant institutional investment in recent years.
How This Relates to DSCR Loans
SFRs typically receive the best DSCR loan pricing. Most lenders offer the lowest rates and highest LTV allowances for single family investment properties.
Related Terms
Duplex
A residential building with two separate living units, either side-by-side or stacked.
Multifamily
Residential properties with multiple units, ranging from duplexes to large apartment complexes.
LTV (Loan-to-Value)
The ratio of a loan amount to the appraised value of the property.
Cap Rate
The ratio of a property's net operating income to its market value, used to estimate return potential.
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