05 Dec Rental Market on the Upswing
Over the last ten years, the quantity of homes that are occupied by renters has increased nearly 34%. That’s great news for landlords or for anyone looking for a long-term investment of 10 years or more. The good news continues… In 2010, average rental rates jumped by more than 12% over levels the previous year. The trend doesn’t show any sign of fading: demand continues to rise and vacancies remain at record lows as more renters flood the market searching for rentals.
For owners of multiple properties or empty-nesters looking to downsize, this presents an incredible opportunity. With mortgage rates at historic lows, this may be one of the best times for prospective real estate investors to enter the market as landlord.
Experts advise that, when seeking investment properties, it’s best to stick close to home. That will help make management of the property less costly and stressful. Due to stringent borrowing standards, investors are also cautioned to avoid properties with more than four units. Oftentimes, down payment requirements are far higher. Another common tip is to focus on properties where your income/cost spread will allow a 20% (or more) monthly cushion. That helps provide a buffer to cover repairs and the cost of property management, as well as giving you a pad for potential vacancy between tenants.
For those with the desire and wherewithal, rental properties can be a boost to a long-term investment portfolio, providing owners with an additional source of income while also being low-risk.