Real estate is a moving target and as we enter the second half of the year we want to revisit the latest and greatest trends within the investing market. Reading nonstop updates from real estate related media, as well as personally talking with hundreds of investors and real estate related professionals, this is what I see unfolding.
Latter 2015 investing trends:
The federal government has been talking about raising interest rates now for quite some time. While buyers and investors do not like to see this happen, it is imperative to get the country back into more positive momentum. With these increasing interest rates now underway and a 10 year trend of slowly rising rates ahead, investors want to gobble up as much low interest rate money as they can get their hands on. This is the best way to hedge against inflation which appears inevitable.
Increased demand for rental property:
Baby boomers and millennials make up the largest two segments of the population. A growing number of both of these age groups are finding interest in renting. They like the mobility and freedom that renting provides.
Additionally there are millions of people forced into renting due to the recession. They continue to struggle to come up with down payment money for purchasing.
There is yet another large group of people who simply cannot qualify or believe they will not be able to qualify for financing.
Whatever their reason, renting is indeed a growing option that people are gravitating towards. This is giving landlords a great opportunity to fulfill their needs and profit from it.
NOTE; WHILE RENTAL PROPERTIES ARE IN HIGH DEMAND IT IS CAUSING LOTS OF RENTAL INCREASES. THIS WILL NOT BE SUSTAINABLE FOR EVER
I suggest that when you evaluate investments that you make decisions based on today’s market rent, with only small increases coming in the near future. Anything above that can be gravy but as many have learned that during the last boom years, there will be a cap as to what you will be able to charge. ALSO, buying in undervalued markets such as those we promote here at EBG will take that worry away.
Wall Street investors have filled their quota of buying single family investment properties. Their strategy of buying and then rehabbing and then renting and then repackaging into small investment bundles and reselling to investors is in mid-stream. There acquisitions for the most part are now over and they are rehabbing and trying to build a management model to rent them out efficiently.
Buying small rental units and single family homes have always been a small independent operations. During stellar times you may get Wall Street encroaching on this, but no one is as efficient in making a profitable business from renting single family homes as the small independent investor.
Today’s rapidly changing real estate market requires proper diligence. The market is still hot and the competition has been drastically reduced.
I think the only thing getting in the way of getting good investment properties today is greed. Great deals exist and will be realized by the purposeful investors. The caution flag may rise in regard to certain locations. Some locations have exhausted themselves and should be avoided. As long as you look for affordable locations and buy in the sweet spot of those location you can still win big.
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