By Shannon Slattery
Forget the housing bubble, the rental revolution is on the rise.
A large part of the nation is still having a tough time financially. Foreclosure rates are increasing, with jumps as high as 60% in North Carolina, 44% in Wisconsin, and 23% in Colorado, leaving many former mortgagees in need of a housing alternative.
And with several million homeowners in some stage of financial despair, there’s a new demographic that’s likely to make the transition to renters. Especially in high-tax rate states like California, where as few as 54% are homeowners… nearly half of the state’s population will seek some form of rental property.
Even with the recent uptick in housing prices, the median home value hasn’t rebounded to its previous market high from 2007. But while home prices still aren’t where they should be, rental property rates have been steadily increasing!
That’s right. Median rental prices have increased by nearly 21% over the past six years. To put that in perspective, a 3bdrm/1bath unit that rented for $1,200/month in 2007 would currently rent for around $1,450. That’s more than a $250 monthly increase’giving the landlord an additional $3,000 in rental income per year… just for that
property. Multiply that rate increase by 10 rental units, and you’ve boosted your rental income by $30,000 each year.
And with the National Association of Realtors predicting that 5 to 6 million new households will join the ranks of renters over the next 10 years, the rental market looks to be ripe with opportunities.
Plus with mortgage rates still relatively low, now might be a good time to expand your portfolio and look into purchasing additional properties to capitalize on the wave of renters that could be flooding the markets in the years to come.