The Basics of Investing in your local Rental Market
Renting your property is a massive, but lucrative endeavor for investors or homeowners. In this article, we’ll talk about the good, the bad and the ugly of real estate rental investing.
Rentals are increasingly being preferred over owning according to real estate reports from Truvia. From a 36.1% share of households that rented in 2006, the numbers were up to 41.1% in 2014, this starts a consistent trend that we will continue to see of years to come. Concomitantly, the number of house owners declined in this period, according to this same report. Among those who rented, the Millennials formed the majority of the group. More than 70% of Millennials were preferring to rent housing in 2014. The trends also indicate that more affluent and middle-class Americans are shifting over to renting rather than owning a home. This is where a company like Property Management Pros comes into play, to help investors and homeowners succeed.
The National Multifamily Housing Council figures state almost 30% of American households are rentals and the age group of most of those who rent are around 30 years of age and below.
Average rentals in different cities
As per the Census ACS survey, the median gross rent for homes in 2015 was $959 while the average was $1,021 in the same year. But this doesn’t show the whole picture, very large rental growths were seen in Columbus Ohio with a 39% increase in rentals in 2015 as compared to 2010. The other cities where rentals have grown phenomenally include Cleveland, Jacksonville, Bluffton, Northern Virginia, and Washington D.C. If you live in Orlando or Bluffton as well, you can leverage the boom in rentals. The smallest increase is seen in Las Vegas with just a 3.8% jump, owing largely due to the housing crisis. But the rental averages vary not only from year to year but location wise as well.
A recent study by the department of numbers revealed the average rent in Columbus was over $860 per month and in Cleveland, the average is $740 for a single family living space. In Orlando, the averages hover around $1,100 for a single family home.
So, if you are deciding on renting out and looking to earn the most money out of it, your location could be the major force to help you succeed or blunder.
The best way to earn more rentals is to have more property to rent out. But if that is not an option, here are some tips:
Make sure there is 100% occupancy: Post ads and contact agents as soon as you know your tenant is vacating. If you live in locations that have a high demand for rentals, you will probably find a tenant before your property is vacated. If your area is not in great demand, the earlier you advertise, the more you benefit. Or better still, ask your current tenant to recommend anyone for renting. Each month of vacant property costs about 8% of annual revenue, so it is important to move quickly. This process can be long and dawning but the higher the rental rate of your property, the more profits you will yield!
Increase the rental amount: Search the database to find if you are charging as per the market trends. If not, bring the rentals up to speed. It is good to have a clause in the rental agreement to factor in an annual increase in rentals. Finding and placing high-quality tenants with good backgrounds and income can help you increase the rental rate, but finding those individuals isn’t always the easiest task.
Try to find tenants who can maintain the property: Maintaining the rental property always incurs more expenditure every time a tenant leaves. If you can find a tenant who agrees to tend to all maintenance issues but with a slightly less rental, it could be a better deal in the long run. Tenants who respect your property or even improve it are great, but those are far and few in between.
So what do I do now?
You know what you need to find, but you also know it might be incredibly difficult! Using a Property Management service such as PropertyManagementPros.com will take all of the work out of being a landlord. For a very small monthly payment, we can find, place and manage your new high-quality tenants and help you maintain and profit from your property for years to come!