Rising Rents - Music to Your Ears?



Rents going up may not be pleasant to hear for tenants, but it could be music to your ears if you are an investor.

The recent CoreLogic Single-Family Rent Index, April 2021, showed a 5.3% increase in national rent year over year which doubled the increase experienced in April 2020.  This is the largest annual rent price increase in nearly 15 years.

Interestingly, detached rentals are experiencing an even higher growth rate of 7.9% year over year compared to the 2.2% annual rate for attached rentals.  This is supported by the CoreLogic report that half of millennials and 2/3 of baby boomers "strongly prefer to live in a single, stand-alone home."

From an investor's point of view, single-family rentals offer large loan-to-value mortgages at fixed interest rated for long terms on appreciating assets with definite tax advantages and reasonable control. 

Rentals are considered to be the IDEAL investment because if offers income to offset the carrying cost of the investment; depreciation contributing to annual cash flows with a non-cash deduction; equity build-up because a portion of each payment is applied to principal reduction; appreciation with increases in value; and, leverage that increases the overall yield through the use of borrowed funds.

Most homeowners are very aware of the housing inventory shortage that has caused homes to rise over 12% in the past year.  The increased demand for homes coupled with the shortage of supply has contributed to the rapid appreciation.  The trend is expected to continue for years.

While appreciation is a large component to the rate of return, cash flows are bolstered by the increasing rents.  This combination makes investments in single-family rentals very attractive.

An added appeal is the familiarity and understanding of this type of investment because it requires the same aspects as homeownership.  The same service providers a person uses for their home can be used for the rentals.  For the investors who don't want to manage the property themselves, professional management is available for placing and qualifying a tenant only or the entire process including collecting the rent and maintenance.

For more information, download the Rental Income Properties.  Contact me if you'd like to have a more in-depth conversation and address any personal questions you might have.

Comments

  1. AnonymousOctober 12, 2021 at 6:55 AM


    Mr Pedro Loan Offer has been a key partner in our success, and an invaluable asset for the growth and future of our company, Mr Pedro and his loan company invested in my business with a loan of $1000000 at the rate of 2% in return and it's was really nice working with him because I do not know what I would have done without the help of Mr Pedro and his loan company,
    Mr Pedro Jerome contact Email: pedroloanss@gmail.com And WhatsApp: +1-8632310632.

    ReplyDelete

Post a Comment

Popular posts from this blog

What every homeowner should know about their property insurance

Image
Insurance is required on a home by the mortgage company, but homeowners rely on it for peace of mind also.   Unfortunately, people may not take the time to investigate their policy and what it covers until they need to file a claim, which could be too late. While it may not seem like the best use of your time, an in-depth visit with your property insurance agent once a year could be valuable to you if you have losses and could increase your peace of mind. The following are some questions you can ask your insurance agent: What is the insured value of the policy and the replacement cost of your home?   Insured value is the amount that would be paid for a total loss but replacing the home could cost more than that amount. What is the deductible?   Higher deductibles on the first amount of the loss are one way to lower the cost of the premium.   It may sound good when you're having to pay for the policy but feel very different at the time you file a cla...
Read more

Homeownership Cycle and Inventory

Image
An interesting homeownership cycle begins with a starter home and progresses to larger and smaller homes throughout a person's lifetime.   Within a few years after purchasing their initial home, they might move up to a little larger house.   The reasons could be that they simply want a larger home and can afford it, or their increased family size may be motivating the move. While the children are small, they can probably get by with less space but as they grow and behave more like adults, even though they may not be, the need for more room becomes more pressing.   Depending on the size of the family, this will last some time and then, as they go off to college, enter the work force and find their own living space, the parents may find that they no longer need the larger home.   In the interest of saving money or possibly convenience, they migrate from a larger home to a smaller home until they consider an assisted living facility or possibly, a nursing home. ...
Read more

Avoid Taxes by Keeping Track of Improvements

Image
Keeping track of capital improvements to your home can help you avoid taxes later down the road when you sell it. Some homeowners don't even consider such a thing because they are aware of the capital gain exclusion of up to $500,000 for married homeowners and $250,000 for single filers.   Possibly, the gain in a past sale didn't exhaust the limit that has remained the same since 1997. Today, homes are much more expensive and appreciation in the past few years has been exceptionally high.   It is now possible and maybe more likely, based on the price of the home, for a homeowner to have gains more than these limits. A $250,000 home in 1997 based on an annual appreciation of 4% would be worth almost $700,000 today.   Capital improvements made to a home raise the basis, or cost, of the home which will affect the gain on the sale. Improvements must add value to your home, prolong its useful life or adapt it to new uses.   Repairs, not considered improvem...
Read more