This post is exclusively for active Land Trust University students.
Many experts tell you to start your investment journey with one house. Then they say the secret to profits and privacy in real estate is to move up into larger apartments. This plan is attractive. It has the allure of growing a large investment business and the imagined returns that come with it.
It turns out that the single-family house (SFH) is not only the best initial purchase for the individual real estate investor, it is also the ideal long-term vehicle for the investor who can self-manage. I call this the “horizontal apartment.” These houses offer better privacy and lower risks than large buildings.
Key Points: The Horizontal Apartment Strategy (SFH Investing)
- Investment Superiority: The single-family home (SFH) is considered the ideal long-term investment vehicle because it offers better privacy and lower risks than large apartment buildings.
- Risk Mitigation: Creating a “horizontal apartment” portfolio—a collection of individual houses—shields assets from lawsuits. A single legal action against a large complex can jeopardize the entire asset, whereas houses in separate trusts provide multiple layers of defense.
- Management Efficiency: Self-managing a portfolio of houses avoids “agency problems” like mismanagement or high fees. Professional management fees in 2026 typically range from 8% to 12% of monthly rent, plus tenant placement costs.
- Tenant Relations: SFH tenants often stay longer and take more pride in the property than apartment renters. Many handle their own minor maintenance, such as yard work and snow removal, which lowers the owner’s overhead.
The Myth of Trading Up
Investors often think that a single big building or a complex is the goal. They believe they are easier to manage. However, concentrating your housing investment into one big property or a complex creates new problems.
The Power of Privacy and Anonymity
If you own multi-unit properties in your name or an entity like a corporation or an LLC, you often lose your privacy. You also face higher liability. Large apartment owners often face unwanted attention from lawyers. People see these owners as having “deep pockets”.
You can invest in many houses, and no one needs to know the total count. This privacy is the first defense against many lawsuits. A lawsuit against a large building can take everything. In contrast, houses in different trusts shield your assets from harm.
Management and Better Returns
Small investors often get the best results when they stay involved. Self-managing your property combines your money with your skills. No one will care for
your property as well as you do.
Professional managers charge high fees. In 2026, these fees typically range from 8% to 12% of monthly rent. You may also pay 50% to 100% of a month’s rent just to find a tenant. Managing your own “horizontal apartments” saves this money.
The Tenant Advantage
In big complexes, tenants often socialize and develop an “us vs. them” mindset. This can lead to joint lawsuits that SFH owners can avoid. Tenants in single-family homes act differently from apartment renters. SFH residents tend to view themselves as independent from the other residents leasing from the same firm. Therefore, when issues arise, SFH residents usually discuss them directly with the management company one-on-one.
(More on this topic in the next newsletter!)
Sources
- Original Article: Hughes, R. (1999). Horizontal Apartments Opinion Piece. Illinois Real Estate Letter.
- Management Data: RIOO App. (2026). Average Property Management Fees.
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