I frequently talk with investors and hear investors talking about how they are scared to death of “getting stuck with a property�. I think we all know, or at least have heard, prices have come down in most markets, there are a lot of houses on the market and good deals are to be had. However, what sense does it make to buy a property if you can’t sell it? I have blogged in the past about how homes are still selling albeit at a slower rate and only the “right� properties or those in good areas that are a good value are selling.
But what about renting? Who cares if you can’t sell a property as long as you can get a good tenant who is going to cover your mortgage, taxes, insurance, etc? Finding cash flow properties is a much easier task now that prices have come down. Areas that have historically been difficult to buy positive cash flow properties in are now full of cash flowing properties. The market is going to turn positive. It is a very lucrative strategy to be buying properties now at a discount, renting them out for some positive cash flow and waiting until prices start moving north again. Once prices start moving up again, those that bought, will be sitting on a significant amount of equity and great cash flowing investments.
I’ve included a brief article about rental demand and where rents have gone lately.
Rental Demand Pushes Rates Up
It’s getting harder for renters to find an affordable place to live with rents rising and availability falling.
The median asking rate for rentals has jumped 14 percent, from $591 a month during the fourth quarter of 2003 to $673 a month in 2007, according to the U.S. Census Bureau. Vacancy rates are down from last year, and average rent is projected to rise 5.3 percent in 2008, up from a 3.1 percent increase in 2007, according to the NATIONAL ASSOCIATION OF REALTORS®.
“We’ve seen demand for rental housing go up,” says Mark Obrinsky, chief economist at the National Multi Housing Council. “The ownership side is retrenching, and we’re seeing the demand going to the rental side. There’s a lot of hesitancy to buy. Others can’t get (financing), so they’re remaining renters longer.”
Here are median rents for the first quarter of 2008 in 12 major metropolitan areas:
Atlanta: $986
Austin: $907
Boston: $1,645
Chicago: $1,355
Las Vegas: $1,056
Los Angeles: $1,699
Miami: $1,368
New York: $1,751
Phoenix: $939
San Francisco: $1,810
Seattle: $1,211
Washington D.C.: $1,687
Source: Rentometer and USA Today, Mark W. Williams (04/22/2008)
Posted by Carter Brown
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