- High demand for rental property in current housing market
- Think demographics, stability and affordabilit
High Demand for Single-Family Rental Property
The limited supply of single-family properties across the country is a fact of life that’s here to stay…at least for a while.
That limited supply affects not just first-time homebuyers…it affects institutional AND amateur real estate investors wanting to take advantage of high demand for single-family rental properties
Despite the “hotness” of the residential real estate market, acquiring a second or third home to rent out for generating extra cash, diversifying investments and hedging inflation still makes sense
Here are some location options that make sense based on demographics, stability and affordability:
The Stability AND Affordability of Birmingham
Birmingham has the largest population in the state of Alabama. It’s home to a thriving health-care industry, several colleges and law schools.
In other words, Birmingham isn’t going anywhere…it’s stable.
Also, Birmingham’s rent growth y/y has remained relatively constant despite the pandemic. Typical rent for a single-family property in Birmingham is $1,140, an affordable option compared to the typical rent of $1,700 nationwide.
The Demographics of Salt Lake Cit
Salt Lake City is home to one of the largest shares of the much sought-after Gen-Z demographic, young people in their late teens and early 20’s who are likely to rent now or in just a few years.
Salt Lake is also home to companies such as Overstock and others that offer good employment opportunities. People who work for those companies need places to live.
Compared to other Western metros drawing transplants from the West Coast, Salt Lake City is still, for now anyway, relatively affordable despite its typical home costing $440,000.
If $440,000 is over your and/or your client’s budget, consider nearby and more affordable Provo (home to Brigham Young University) or Ogden
The Enduring Appeal of Nashville
Nashville has been on the lips of buyers and investors for a while but now, according to Bloomberg, may be a good time to invest. Though Nashville’s home prices have increased +9.6% in the last year ending in February, home prices have increased +9.9% nationally, according to Zillow.
Nashville’s rental growth definitely slowed during pandemic 2020 but began clicking up +1.6% to $1,600 in February. This $1,600 is, again, below the nation’s typical rent of $1,700
And, by the way, Nashville isn’t going anywhere either.
Cities and suburbs aren’t the only options for single-family rental income. See this week’s article “Property Owners Predicting ‘Bonkers’ Summer” as one example
Also check out Locate Alpha for analyses of cities, sub-cities and specific neighborhoods
Be aware that beach-town properties require extra maintenance, higher insurance costs due to weather damage and extra wear-and-tear on the property.
Know that local laws, renter friendliness and property tax liabilities factor in rental property decisions. And know too that if you and/or your clients choose to hire a property manager to deal with any problems that may arise, property managers can consume as much as 20% of your/their rental income flow.
Thanks to Bloomberg and Zillow.
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