Tuesday, June 12, 2012

So How is the Rental Market?


I get this question multiple times each day from existing and prospective investors so I want to share some information that I have been gleaning from articles and observations.

The short answer is the rental market is strong and projected to remain strong for the foreseeable future.  Fannie Mae says the foreclosure crisis will drive 3 million former homeowners to rent single family homes between 2010 and 2015. Single family home rental was the fastest growing part of the rental market from 2005-2010.

In the next 5-10 years, you’ll see tens of billions, if not hundreds of billions, of dollars of private equity pouring into the single family rental business says Justin Chang, Principal of investment firm Colony Capital. So are we becoming a “Renters Society”?


We have been hearing a lot in the press about how we are becoming a renters society. They espouse the theory that the recent real estate upheaval has changed people’s perception of owning their own home.  Articles in USA Today for example tout that people are discovering the joys of renting as opposed to owning their homes.  Cited as examples are no maintenance expenses, no property taxes, greater mobility, more discretionary money available from not having mortgage payments, taxes and repairs.

I don’t buy it though. I still believe that the American Dream is to own your own home, and there are statistics to back this up. A recent Harris Interactive survey commissioned by Coldwell Banker, found that 83% of renters want to own homes. However, I believe we will not see people moving back into home ownership for the next several years.  Down payments have to be saved up,  credit history mended, and employment security achieved.

So, where does that leave us now in the rental business?  We are just beginning to catch the wave. How big the wave or how long the ride we don’t know, but we are in the right place at the right time. So lets jump in and enjoy the ride. Invest now at a discount, Enjoy rising rent rates while watching your property appreciate. SURFS UP EVERONE!

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