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We’re a nation of renters. That’s what the market is telling us. According to a report from MSNBC.com, “the number of houses occupied by renters rose faster than the pace of new vacancies created by homeowners moving out” (in the last quarter of 2011).
Commerce Department data shows that rentals increased by 749,000 in the last quarter of 2011. Additionally, we’re seeing the lowest level of ownership in nearly 14 years.
The good news for investors is that because we are a nation of renters, rents are higher because demand is stronger. Currently, the median rental price is $712/month. And prices are going anywhere but down.
It’s All Good News for Investors
Demand is up. Rent is up. Home ownership is not the current American dream – a place to live is. Let’s look at how investors can take advantage of this situation – Buy & Hold, Flippers & Multi-Family.
Buy & Hold Highlights
You should consider holding properties longer to maximize your cash flow, especially in this time of uncertainty. You can buy cheap now, hold and rent and sell when the market returns. According to the MSNBC article, homebuyers don’t have much confidence that we are at the bottom of the market. The empty house problem is slowing, but it’s not going anywhere anytime soon. So, if you’re holding, keep on and use this renter’s demand to add a little cash to your monthly bottom line.
The Flipster’s Strategy
Flippers can take advantage of this situation as well. Landlords need inventory, so it’s time to play let’s make a deal! Get in there and get those homes ready to rent and rake in the cash. Now is a great time to scoop of bank-held homes and flip to landlord investors.
Another trend in the market right now is that banks are waiting to foreclose until they clear the REO pipeline. Grab that late list and start contacting homeowners. You may be able to get them out of a bad situation and flip.
Plus, with home prices predicted to fall another 5 to 10 percent with the current unemployment problems, it’s a great time to scoop up flip properties. Your landlords are waiting for the flip.
Multi-Family is Where It’s At – The Money, That Is
For you commercial multi-family investors, it’s the single shining star in the market. More renters mean more investment opps for commercial properties. Get in now while you have a steady supply of lessees.
A little proof for the pudding:
“The steady rise in demand for rentals has tightened the supply of housing, helping to push rents higher. Homebuilders report that the market for multi-family units has been a lone bright spot in the overall housing market.” – MSNBC.com