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.