At this point, there really are very few 'new' techniques, strategies or markets to take advantage of when investing in real estate. With reality T.V. highlighting the buy, fix-up, sell to a retail buyer trend, many investors identify this as the best way to get involved in real estate. With so much news right now about rising interest rates, rising home prices and fewer properties on the market, it is no wonder that the retail sales strategy is getting a lot of attention. But, if you really dig into the numbers and pay attention closely, you will see that many savvy investors are taking advantage of what some think are the later stages of the best reo-to-rental market in history. Many investors are buying up properties quickly while the prices remain low and planning to ride the wave of rising inflation as it pushes rents higher.
Different Real Estate Markets Have Different Investing Trends
Whether you are in a buyer’s or seller’s market or a good market for long-term buy & hold, depends on your particular location across the country. But as we have seen over the last few years, where you live and where you invest can easily be two different places. So really what is more important that what is happening in your market, is what is happening in the your investment market? What is happening in the market that you are putting your money?. One thing most experts can agree on is that many markets are "landlord's markets" right now as demand for quality rental properties continues to grow.
Rental Housing Demand Remains High
Demand for rental housing continues to remain high especially in the Memphis and Dallas markets and we have been happy to find a similar situation in Houston as we begin setting up our offices in that city. Memphis Invest and Premier Property Management financed a study in early 2013 where renters were asked about their intentions. The study focused on identifying both single-family home renters as well apartment structure renters and what the study found was that renters expect to be in their current properties for a while.
The single-family home renters overwhelmingly replied that they would be in their properties for multiple years. They also identified the security and standard of living as reasons they planned to stay. So, those currently living in a rental situation and those renting in the very near future are expected to be doing so for a long time. The current market just makes it difficult for them to purchase a property as prices remain high, interest rates go up and they are unable to save up for a down payment.
This demand for rental housing will help push rents up in many areas of the country...especially areas where renting is already in high demand. The increase in rents will help increase investor's returns, while the expanding and improving housing market itself should help build equity and expand property values.
Renters Expect More For Higher Rents
At the same time, landlords and property owners are entering an enviable period where rental demand is high and renters are expecting more for a higher rent. Investment property owners who are providing great looking properties and a high quality management company are going to be able to demand stronger rental rates, longer occupancy periods and can even afford to pick the best renters. Renters have a lot of choices and the renters who are in the best position to pay - and know they are quality renters - will be willing to pay a higher rent for a nicer property and a better experience with a management company. They are not going to settle.
With this sort of leverage on both sides, the best landlords who choose great teams may increase returns and preserve their investment properties, while renters can expect a high level of service from their management companies in return for paying higher rent. This is going to be a very interesting period of time for long-term buy & hold investors.
Regardless of what the reality T.V. shows are showing, some parts of the country are definitely trending toward a smart group of investors diversifying their holding into long-term buy & hold properties and buying up the better properties with better management. These trends are here to stay for the for-see able future as the housing market bounces between recovery and stall.