Why Single Family Investing Has Morphed Into A Very Popular Investment Class
For hundreds of years small individual investors have been buying single family houses and using them as investment property. Often these investments were made as a result of someone moving from these properties as their primary residence and for one reason or another they chose to rent them out instead of selling them. These small investors enjoy the monthly cash flow, the tax benefits of having these investments and the continuing price appreciation that they kept providing. Now with such a huge demand everyone wants to invest in them.
What created the demand for rental housing?
When the housing bubble burst and prices around the country corrected, many markets that were under tension of a recession tended to over correct. The fallout was devastating to millions of homeowners. Like with any disaster, there are always good things that happen as a result of the lessons learned from the disaster and the housing burst too had its benefits though wrapped in crappy wrapping paper. Many people were up to their eyeballs in debt and were stressed beyond belief trying to keep up with it all. Easy credit was such a lure that the eventual economy bursting was inevitable.
The positive outcome is it gave people a chance to regroup, take stock into what is really important to them and they have started putting more emphasis on saving for a rainy day and building up their retirement accounts. As a result many people who were forced into renting actually found peace of mind in renting. Not being strapped to a mortgage has been appealing to many.
A new class of renters has been uncovered
Forced tenants: Millions of Americans were forced from their homes due to inability to maintain their high mortgage payments when the recession hit. The first thing these people wanted to do was to get back into a house, but one that was more affordable. Those forced into renting are finding comfort and peace of mind in renting and many are opting to stay renters.
New family formation: totally new to the tenant pool are newly formed families. For years families have been doubling up and living together. Often adult children were living in their parents’ basements. These people as well, as the rapid growing population, are all now being added to the rental pool.
Baby boomers: yes this took most people by surprise. It turns out that now, as their adult children have finally flown the coup and moved out, these aging parents want to sell their big homes and no longer wish to be strapped to the details of maintaining a home. Many of these baby boomers are choosing to move into the city to be near their children and grandchildren.Renting a house near the activity of theatre, fine dining and even golfing is a choice preference for many.
Find a need, fulfill the need and create success
So indeed the rental pool is growing and there is no end in sight. Investors who are now spooked by the volatility in the stock market are looking for safer and more tangible investments. The high demand for rentals and the ease and benefits of investing in single family homes simply makes sense. The two go together like peanut butter and chocolate.
Everyone from the small mom and pop investor who owns 1 to 10 properties, all the way up to institutional investors who own thousands of properties are finding a great business model and investment opportunity with investing in single family homes.