rental property

Is It Time to Buy A Rental Property?

Yesterday, we discussed rising rents and their impact on the long term housing expense of tenants. Today, we want to look at the opportunities that single-family rental units present for the small investor.

With house prices inching up and rents skyrocketing, this may be the perfect time to invest in single family residential real estate.

If you do, you won’t be alone. According to the National Association of Realtors’ (NAR)2012 3rd Quarter Metro Area Report:

“Investors…accounted for 17 percent of all transactions in the third quarter.”

More than one out of every six houses sold are purchased by an investor. In the most recent MarketPulse Report by CoreLogic, their Principal Economist, Sam Khater, wrote on the subject in a story titled Roll Tide, or The Rise of the Single Family Rental Market. The major takeaways from the article are:

The single-family rental market remained very active in the late summer of 2012 with increases in demand, tightening inventory and rising rents.
Nationally, rental leasing volumes were up every month for two years. In August, they were up 7% over last year.
Supply was down 11% over the same period.
This tightness in supply has caused rents to increase.
Rent growth is expected to increase at a ‘strong clip’ late in 2012 and in 2013.

If a private investor is looking for a great hands-on opportunity, perhaps purchasing a single-family house to rent out makes sense. Check with your local real estate advisor to uncover the opportunities in your region.

source: KCM

Rising rental costs may drive home sales up

Home sales could turn out sunnier than expected this spring based on data coming out of the rental market, according to economists at the Mortgage Bankers Association.

Jay Brinkmann, the trade group’s chief economist, said Thursday that apartment owners have raised their rates, in particular large investment trust Equity Residential ($58.05 0.45%). That’s coupled with fewer people, roughly 60%, who intend to renew a lease, according to a study by Kingsley Associates.

"This means we might see a spring season better than the numbers are predicting," Brinkmann said at the MBA’s mortgage servicing conference in Orlando, Fla. The trade group forecasts 4.39 million single-family homes sold in the second quarter, already an increase from the seasonally adjusted 4.17 million a year earlier.

Many Americans ran to rentals during the worst of the housing crisis, pushing homeownership to a 14-year low, and more tenants elected to stay put.

"The question is not how did (homeownership) fall, but how it got so high in the first place," Brinkmann said.

The MBA adjusted its forecast for mortgage originations in 2012 to just more than $1 trillion with more refinances than initially expected, according to Mike Fratantoni, vice president of economics and research. That’s still below 2011 levels and would be the lowest since 1997.

Fratantoni expects home sales to grow 10% in 2013, though he predicted refinances will drop off considerably as MBA projects interest rates to slowly move off the lowest levels in 40 years.

Positive employment news, including a continued decline in jobless claims, could impact housing soon, but Brinkmann said uncertainty over business taxes in an election year and European debt could keep growth at bay.

"Everything is going to be based overall where the economy goes," Brinkmann said. "This is going to be a slow year. There are a number of headwinds we’re facing in terms of economic growth."

Source: “MBA: Rising Rental Costs May Drive Home Sales Up,” HousingWire (Feb. 23, 2012)

It may be the time for you to consider buying an investment property. Give me a call or email me.