As a rental property owner, you have a lot of responsibility. Finding a quality tenant, writing a lease agreement, maintaining the property, collecting rents, the list goes on and on. One of the most important tasks you’re responsible for that directly affects your bottom line is setting the right rent rate. How do you conduct due diligence to make sure you’re setting the optimal amount for rent, making sure you aren’t charging too much but also aren’t leaving money on the table? Let’s walk through a few ways you as rental property investor can calculate the right rent to maximize your investment returns.
DTLA vacancy rates soar to the highest in 17 years, flip rates have plateaued, and Amazon announced their search for a city to home HQ2, their second headquarters location. It’s important that investors stay engaged in the industry, especially given the rapidly evolving nature of SFR.
As foreclosure inventory sinks to record lows, institutional investors are looking to an alternative acquisition strategy to combat the lack of available rental housing stock - build-to-rent. Build-to-rent is a fairly new submarket in the single-family rental space. Instead of building homes to sell as a primary residence, the new homes are rented out to a tenant and owned by an investor.
Owning investment properties can be a great way to supplement your income or passively build your personal wealth, but it starts with a good property in a strong rental market. Real estate investors need to know both their strategy and the metrics to consider when identifying strong opportunities. Whether your investment strategy relies on rental appreciation, gross yield or a healthy combination of the two, we’ve analyzed the data to find the top metro areas for each.
While the single-family residential (SFR) investment asset class remains largely held by small investors, oftentimes owning a single rental property, institutional investors have also cashed in on the peaking rentership rates sweeping the nation. In doing so, this has helped bring validation to the SFR investment industry as a whole, spurring efficiencies within operations and services which ultimately benefits all residential property investors.
One of the key differentiators attributed to Investability's uniqueness in the single-family residential (SFR) investment space is our strong data backing from RentRange®. RentRange has been collecting data since 2008 and has since expanded its database into a robust national rental and housing market analytics powerhouse. As we wind down from summer, our team wanted to highlight some of the top trends from Q2 and what they mean for investors like you.
According to a recent study from BiggerPockets, a well-known online community geared toward empowering new and active real estate investors, most investors are seeking long-term rental properties. Flipping houses came in second, followed by wholesaling and other commercial options. Yet, of the 25,000 people surveyed, more than half have never done their first deal. 56% of the total surveyed were interested in real estate, about 13% have done a single deal, 20% have done between two and five deals, the remaining 8% have done between six and 20 deals and only 3% have done more than 21 deals.
College is no small expense for most American families. Even for those fortunate enough to have the financial means or a scholarship backing, housing is largely an unavoidable and costly expense. College Board quoted the average cost of room and board in 2017 to be $10,000 at public universities and $12,000 at private universities, annually. That’s a whopping $40,000 to $48,000 over the course of a 4-year degree! As parents weigh the costs of sending their teens off to college, some are turning to an alternative housing option - investing in property.
The rise of suburbanicity.
It’s a familiar story; young families and first-time home buyers find themselves outpriced from urban cities decide to trade in their bicycle commutes and nightly happy hours for two-car garages and A+ school districts. Though the suburban sprawl is nothing new, some metropolitan statistical areas (MSAs) are seeing these areas outpace urban areas in terms of population growth, price growth and overall popularity.* Since 2013, list prices in these top ten suburbs have grown about 2x faster than their associated urban zip codes and at an annualized rate of about 17%.* Real estate investors are seeing an opportunity in these ten suburbs to buy reasonably priced properties which could continue to appreciate faster than their urban counterparts.
There’s no doubt real estate can be a lucrative investment strategy. As discussed in previous posts, there are a few options available to investors interested in adding real estate to their portfolio. Buy and hold investing, fixer-upper flipping, and even real estate investment trusts (REITS) are a few common strategies. In this post we’re going to cover an acquisition strategy not yet discussed: auctions.
As a real estate investor, or even as a homeowner, you might at some point be faced with the challenge of hiring a contractor. No matter the project scope—a bathroom remodel or a full renovation—you should absolutely do your homework before choosing a Craigslist contractor to get started. As discussed in previous blogs and podcast episodes, your contractor is an essential member of your A-team and can make or break the experience. Doing your due diligence beforehand can save a lot of frustration down the line.
Detroit has consistently ranked as a top city for investors and renters in recent yielding reports. We thought it would be a great blog topic to take a deeper look into what has been fueling the city’s growth and overall economic resurgence.
Taking the plunge into real estate investing can be daunting, but most new investors weigh the risk to reward. Doing ample research on the front end helps to instill confidence in the decision to buy an investment property but nevertheless, despite best efforts to fully prepare, investor missteps are possible along the way. Learning from these mistakes is the key to successful investing in the longer-term. Here, we’ll break down five of the most common mistakes and how to avoid them in your own investment journey.
When some investors think of real estate, they assume that because prices are generally rising across the country, we must be headed toward another crash. The truth is that’s simply not the case. A bevy of factors have come together that are serving to safeguard the economy against another national crash.
The RentRange® release of the top yielding rental markets in the first quarter of 2017 is now available.
For investors seeking high yielding rental property, these top 25 markets might be worth consideration. Unsurprisingly, the top returning markets in the first quarter of 2017 are in the Midwest and Northeastern parts of the country, as the coasts continue to experience high home prices and subsequently, lower return on investment.
ndianapolis has emerged as a top destination for homeowners and residential investors alike due to a number of economic and social factors. Downtown Indianapolis was ranked #3 on Livability’s 2015 Top 10 List of Best Downtowns in the United States and more recently, America’s Best City for Renters in 2017 by Forbes.
We’ve discussed it before; why invest in real estate? The truth is, investment diversification is generally a good idea. As demand for housing continues to grow, real estate remains a wise choice when looking for stock market alternatives. As one of the nation’s leading providers of housing market data, we took to our own database to offer reasons why real estate could be a smart move for your next investment.
The Investability team returned this week from the 5th Annual IMN Single Family Rental Investment Forum (East) where we proudly served as the event’s Lead Sponsor. The conference, held biannually in Miami and Scottsdale, brings together the top service providers and investors in the single-family residential (SFR) investment space for networking and incredible education opportunities. We had a great time connecting with old friends and new players in the industry, but if you missed it, not to worry! Here are many of the conference highlights and information related to where the industry may be headed next...
Flipping houses can be another great strategy for real estate investing. As discussed in previous blogs and podcasts, flipping generally requires an investor to take a hands-on approach to the investment rather than focusing on appreciation and cash flow as they would in a long-term hold. The investor takes the responsibility of renovating to add value to a distressed property that they then aim to sell to a homeowner at a premium. The key is finding a property at the right price that requires the right amount of renovation to fit into their investment strategy. Ultimately, after doing value-add improvements, the investor profits from the sale. Those who can find the balance and master this craft are able to replicate the process and continue finding repeat success with house flipping.
Housing prices are on the rise in most of the above markets. For example, Concord, NH has seen a 19% increase in housing prices over the last five years. On average, a 3-bedroom single-family home is in the $220,000 range. Rents in this metro have also seen a major increase, about 23% since 2011. The spike in Nevada metros is even more pronounced, with home prices appreciating upward of 60 -100% and rental rates spiking by up to 35% over the last five years. In the Phoenix-Scottsdale metro, home prices have appreciated even more, at a whopping 104%!
When conducting rental market analysis for real estate investing, many investors look at the rental saturation and vacancy rates in a particular market. It’s imperative to understand how saturated the market is and gauge demand level. As detailed in previous blogs, low vacancy often indicates high demand, which can translate to higher rental rates and better returns for investors.
Investing in rental property can be lucrative, but it’s important that investors be wise and deliberate in their strategy. One of the most commonly asked questions from new and seasoned residential property investors alike is, “Where should I invest?” This is a vital consideration when it comes to the ultimate success of a rental investment. Investors need to be able to analyze not only their prospective properties, but also their prospective markets. If an investor doesn’t live in a strong rental market, it may be prudent to consider investing in real estate out of state.
The Forbes “Where to Invest in Housing in 2017” list is out and the Lone Star State is in! Texas is home to three of the Forbes ranked top real estate investment markets. Dallas takes the number one spot followed by Fort Worth at #9 and San Antonio at #20.
Now that you are aware of the option to invest in real estate using your self-directed IRA and can confidently identify a custodian and prospective investments, the last piece to consider is ensuring you clearly understand the limitations on IRA investment transactions established by the IRS and other applicable law. When selecting investments for your IRA, there are certain people and entities that you cannot do business with; since doing so could put the taxable status of your retirement funds in jeopardy.
Welcome back to the self-directed IRA mini-series. In this installment, we will help you identify the right custodian and begin to understand the rules around holding real estate in your IRA. Here is a list of questions you may find useful as you interview prospective custodians for your self-directed IRA...
Did you know you can invest in real estate with your IRA? Since 1974, the IRS has allowed investors to diversify their retirement holdings to include non-traditional investments like real estate. With a self-directed IRA that owns real estate, your account’s profits are tax deferred and the rental returns and/or sale proceeds become part of your retirement savings. However, most investors are unaware that this option is available so we’ve put together this three part series to show you how you can get started.
A real estate investment is only as strong as the investor’s understanding of the numbers. Without a solid foundation for calculating a rental property’s success potential, you could inadvertently expose yourself to potential financial loss. In this post, we will break down the key metrics that every real estate investor needs to know to crunch the numbers of a prospective deal like a seasoned professional.
Are you considering diversifying your investment portfolio or looking to establish one in the upcoming year? Think beyond the traditional stock market and consider real estate investing. While purchasing investment properties is not a new concept, the single-family residential (SFR) sector has more recently emerged as a legitimate asset class—and for good reason with more than 43 million U.S. households currently classified as renters. Nevertheless, many investors don’t have adequate cash on hand to purchase an investment property (let alone multiple properties) outright, which means they’ll need financing to help them achieve their goals.
As discussed in The Real Investor Podcast episode #6—Are we in a Housing Bubble?—the notion that we are currently in the midst of a national housing bubble is false. While the concern over an impending bubble burst is a common source of discussion within the industry, it’s important to fully understand the factors that contributed to the housing crisis back in 2005. In this post, we will contrast past and present market conditions, identifying three primary indicators that suggest the real estate growth we are experiencing now is sustainable.
Congratulations are in order! Assuming you’ve gone through each of the previous steps in this series, you are the new owner of a rental property. Now you have a choice—you can self-manage the property or hire a property manager to do it for you. If the property is not in your state you may have no other choice but to hire a property manager, but even if the property is down the street, you may still opt to enlist a professional resource.
This website and the information contained herein is provided by Investability™, which is owned by Altisource Solutions S.á r.l. (“Altisource”). Investability provides information on real estate investing and certain market data on real estate investments on an “as-is” basis for informational purposes only. Your use of this information is voluntary and at your sole risk. The information contained on this website is provided by Investability in good faith, but in no event shall such information or data create any warranty or representation. None of the information provided on this website is intended to constitute, and in fact does not constitute, financial, investment, tax or legal advice by Investability or any other Altisource entity. All investment decisions carry inherent risk, and no Altisource entity shall have any liability with respect to any investment decision made based on the information contained on this website.