Tuesday, April 29, 2014

Rental markets have risen 19% over the last year and despite a dip in quarterly growth,

Rental markets rise 19% for 2014

The past few years have been painful for the housing market; however, with the recent upswing in the economy the market has rebounded a bit. 

This is fantastic news for those who are determined to own their own place. However, for many people this sudden rise in interest will price them out of the market. This would normally put a strain on rental property as the demand has begun to aggressively chase supply.

Rental markets have risen 19% over the last year and despite a dip in quarterly growth, monthly median rent growth is picking up with steady year-over-year growth. 

This is regardless of lower incomes being reported in the first quarter also in spite of a decrease in home affordability. In this case landlords are limited in how much they can increase the rent, because of the lower incomes, but they are not suffering as demand makes up for the difference.
It’s a landlord’s market as long as inventory fits what renters are looking for. The second quarter is projected to see a slowing of the rental market as the new multi-family units are absorbed into the market. Gen-Yers are entering into the rental market too, but low income for this segment of the market may result in landlords being unable to raise the rent in many places.

Rising mortgage rates and high home prices are also factors that are forcing some people into the rental market. Average home affordability goes down as mortgage and home prices rise, kicking would-be home buyers out of the housing market. In many niche markets rent prices were down 1.2% over the last quarter, but they were up 16% from the previous year. 

These numbers make 2014 a potentially lucrative year for property managers and rental owners. Many of these niche markets are in big cities, places traditionally open to growth. However, the influx of the 80 million strong Gen-Y populations is skewed towards these larger markets. This is logical considering the proximity to job growth and wealth development available in the future.
The prospective talent pool of metropolitan areas assures that construction will continue in these markets until demand can be met. 

However, 2014 is not looking so bright for New York and Boston who won’t see the aggressive rent growth they have experienced over the last couple of years. These areas are saturated with prospective renters and the demand is still exceeding the supply. It’s going to take a little time for these markets to even out and reach the potential that is projected for the rest of the country. The housing market is still normalizing, showing strong growth in all but three of the 35 largest markets showing annual appreciation. Home prices will continue to rise at a slow, but steady pace. In the meantime, we should assume that rental prices will do the same over the coming months.


Thursday, April 24, 2014

Understanding the Risk of Renting to Own a property

In the past the American dream consisted of owning a home; with the unstable economy and a crashing housing market, that dream seemed unattainable for many people.

 However, things are looking up with a rebound in the economy and the housing market slowly climbing out of the rubble. Many people may be interested in owning a home, but the recovery is slow and a certain sector of the population may not be capable of attaining a loan or plunking down a hefty down payment. One option to circumnavigate this issue is rent-to-own housing.

 Some of the perks to rent-to-own are: buyers can build credit and save money during the rental period and depending on the contracts a renter has the right to change their mind. 

On the other side, some of the disadvantages may be enough to send potential rent-to-owners running for the hills. There is an upfront option fee that generally consists of a weighty down payment consisting of a percentage of the selling price. 

The rent may be higher than the equivalent property in the neighborhood and this is because of rent credit that is applied to the option fee and ultimately becomes part of the seller’s payment. Also, if the seller fails to pay the original mortgage payment, the property may be foreclosed on and the buyer may be forced to move. 

The seller may get lucky and lock in a high price that generally cannot be negotiated once agreed upon; however, this can obviously go both ways if the neighborhood begins to flourish. Also, if someone else approaches the seller with a better offer, they cannot take that offer over the original buyer. All repairs become the buyer’s responsibility and at the end of the rent-to-own lease the buyer may still not be able to buy the house.

It can be a risky alternative to the traditional buyer/seller relationship, but to a motivated purchaser with spotty credit this situation can work out quite nicely. Because of the potential for loss on both sides of this agreement people interested in rent-to-own deals are strongly advised to seek the advice from separate real estate attorneys.

Statistics from 

Thursday, April 3, 2014

Rent or Own in Miami, your Choice !

Renting a property in Miami Florida

Renting vs. Owning; this is a perennial discussion for many people considering their options. One major perk of renting over buying is: location. Many people, specifically young professionals, won’t be able to afford to buyproperty that satiates every want, need and desire; however, they can afford to rent a place that may meet most of their criteria.
Think for a minute what a one bedroom apartment on, say, Miami Beach might cost. 

The median home value for Miami proper is $266,600 and that is a 24.1% rise over the last year; that shakes out to $371 per square foot. This is a huge step up in price from the $179 per square foot average for Miami/Fort Lauderdale metro areas. 

But, being that Miami Beach is centrally located to the bustling ports of downtown, Wynwood, Brickell and the business district, it may be ideal for a person to live there. Thus, renting a place in a centrally located and beautiful area is not only possible but much more affordable than buying. 

Also, consider the creature comforts that come with renting beyond one’s immediate means. If there is a gym in the complex, the likelihood goes up that it will get used more often.

This could lead to a better quality of life in the long run. Plus, consider the time spent enjoying the creature comforts an investment in quality of life. In a survey 43% of people reported that they were unwilling to date someone who lived more than 30 minutes away. 

 Living in the same neighborhood gives people common interests, living in the same complex brings those interests even closer together.

The time spent lounging at the pool or enjoying the gym is actually time spent getting to know neighbors and building relationships. Working and living in a community that represents where you aspire to be, may be the first step towards getting there.

statistics from Rent.com & Zillow.com

Monday, March 31, 2014

A flood of new properties only means great news for Property Managers

Property Manager News

Why Tenants & Property Managers  can feel the flood 

In the last 12 months many real estate markets have rebounded at an astounding rate.

Home values have soared off the charts in many places; mortgage rates have risen from their shallow graves and negative equity has plummeted at an unprecedented pace.
Mortgage rates are predicted to increase steadily and reach 5% or more by the end of 2014, home ownership rates are forecasted to fall to their lowest point in nearly 2 decades, with home values increasing by nearly 3%. For renters this news is fantastic.

The rise in home prices, home inventory and mortgage rates doesn't necessarily mean that prices will rise aggressively. Right now the country is in a general state of stagnant rate growth due to poor wage and job growth. This means that while new construction is hitting a stride, property owners are limited with the amount they can realistically raise rents and dormant property is a drain on resources. New construction of single family homes has all but halted in the wake of multi-family buildings that consist of 40 units or more.

 Nearly 170,000 multi-family rental units are estimated to flood the market by the end of 2014 and in order to justify their existence, job growth needs to increase so demand can meet supply.  Homeownership, on the other hand, is due to plummet to 65% or less by the end of 2014; this is again due to the low wages and high un-employment.

Many Gen Y-ers are re defining the American dream of owning a home, due to the financial and employment hardships they are currently facing. Maybe the tradition will come back, however with rental properties becoming more luxurious and expansive with each new construction, the future may look more like a stacked utopia filled with loved-ones for many young people.

 Also, many young people are seeking out opportunities in cities such as:  Atlanta, Dallas, Denver, Houston and Portland. These cities are major hubs with lower rents in many places.

The trend for young consumers is definitely skewing towards making better decisions with money for the foreseeable future and renting a property  seems to be the best option, for now.

Playing chess with Rental property leads to much wiser investements

Why playing chess with Rental Property is great way to invest elsewhere

Why playing chess with Rental property leads to much wiser investements

Many people of Gen-Y are finally finding their sea legs after the recession; jobs have become less stagnant and as such incomes haven’t risen. A percentage of these young adults are trying to catch up to the playing field expected of them by their Baby Boomer parents by securing jobs, housing and starting families. However, these days the dream of owning a house with a white picket fence is nearly inconceivable to the college grad struggling to find footing. The trends are skewing towards a future population that will perceivably rent their homes for a much longer period of time before deciding to take the home owners plunge. (If at all)
                One advantage to renting a home is that there are no payments that have zero return on interest, for example: closing fees, mortgage interest, property taxes, home owner’s insurance and maintenance. All of these can stack up and make owning a home a financially laborious task. Fidelity investments indicated that stock investments over the last 45 years netted 4.6% higher returns on investments than real estate. Ideally Gen-Y renters stand to make more money over the long run by leasing homes and investing their saved income in stocks.
                Another common myth is that home ownership is prudent because mortgage interest is tax –deductable. According to the advocacy group the National Multi Housing Council, this only true for half of home owners. Unfortunately for the other half of home owners, even with mortgage interest and property taxes their total deductions do not exceed the standard federal tax deduction which is $10,900 for couples and $5,450 for singles.

                With the job market in flux, the flexibility afforded with renting over owning is immense. Typically property must appreciate by 10% to recoup sales costs and on average that takes 5 years. However, jobs and markets are ebbing and flowing, potential buyers may need to relocate and in doing so find themselves in a precarious situation. Also, new condos and multi-family homes in many cities heavy with construction have found a vacancy rate of 2.5%. Many Investors in these areas have slashed apartment rates in order to generate interest. Some of these places are offering up to 3 months rent free and also provide amenities otherwise un-affordable to new home buyers.

Thursday, March 13, 2014

Rent or buy? It’s a question that only the individual can determine.

Rent or buy? It’s a question that only the individual can determine. 

Tenant Screening Report

As of December 2013, existing home sales had risen to the highest point in seven years and median prices continued to show strong growth. However, over the last year rental property prices have gone down .23% and over the last three years tenant pricing has gone down 1.23% on average. 

This is a pretty strong trend towards rental property across the board becoming more affordable. So, the next question is: when is the best time to start looking for a new place before turning in the keys on the old one? This is a difficult question since there are many variables that can determine how long the process takes. For example, is the place currently uninhabited?

What about your backgroundcheck? Is it clean? Background checks can take as long as the people performing them allow. Many rental properties have shifted their process to utilize one stop background checks in order to speed up the process. 

The general consensus is that a little over a month out from moving day is probably ideal. In the rental business the sooner the property is filled, the better. That means that generally speaking, all of the pressure is on the renter. They need to get packed, forward the mail, organize movers and moving trucks, etc. which can certainly be an arduous task. 

Statistics show that 1 in 6 Americans move every year, most American will move at least 11 times in their lifetime; that is a huge chunk of time preparing to pull up stakes only to do it again in a few years.

 It would behoove most Tenants  not to stay in one place for a while, get the most that they can from the lower rental rates and then try their luck in a different place. 

Statistics from www.trulia.com

Tuesday, March 4, 2014

Understanding the USA Rental Market 2014

A look at the USA Rental Market for 2014

Rental property is up 2.8% over prior year and up 14.2% over a 5 year period.
With sales down in most regions and an influx of rental properties, the typical tenant screening process is no longer enough to meet demand. In order to stay competitive in an ever expanding market, one has to go with the flow and find new and innovative ways to increase productivity in order to meet demand. Nearly every enviable market is projected to see an increase in rental activity in the coming months and many property managers are turning to one stop tenant screening services.

These services provide immediate access to rental history, credit scores, nationwide criminal records searches, bankruptcies, medical collections and employment summaries. In a series of short steps, the website affords landlords or property managers the chance to effortlessly access important information about possible tenants for their rental properties.

Consumer optimism is projected to surge in 2014 with the recession fading into the distance ever so slightly. However, there are still many obstacles for would be homeowners that could put a hold on those picket fenced desires.

58% of adults aged 18-34 find saving for a down payment on a home to be nearly impossible; 33% have poor credit history and because of these factors they will be unable to qualify for a mortgage. This leaves the rental field open for these would be home buyers and for property managers to be inundated with prospective renters.
With credit standards loosening many single-family renters may see the opportunity to become home owners again. This trend could lead to fewer homeowners being foreclosed on in the future and thus the cooling of single-family home rentals. The trends show that multifamily homes make up an unusually high share of new construction.
These Multifamily homes will be the first stop for many 18-34 year olds who have been able to locate steady work and are ready to move on from their parent’s house.
This shift shows more demand for multifamily home rentals with the demographic opting to start their lives and raise their families as renters. Ironically, this shift is both good and bad for the housing market: good, because the uptick in multifamily housing construction is a sign of housing recovery; bad, because the rate of homeownership is projected to decline in the coming years.

Many markets have been saturated with foreclosed properties and have been over-valued from the start.

Though these places may not be ideal markets for ownership, they are rife with possibility for property management and renters alike.