5 Reasons Why Rental Properties are a Smart Investment Right Now
There’s no doubt that investing in real estate is an ideal way to make money in both the short and long run. Right now, there are several reasons why the market is primed for rental properties and why investing in real estate is a smart move you can make – here are 5 of them!
Reason #1: Millennials aren’t buying homes
You may have heard how millennials are not buying homes at the rate that the previous generations used to, and this isn’t changing. Many millennials have high student loan debts and, in addition, a large cohort of this generation doesn’t want to deal with hidden homeownership costs. Millennials own only 4% of the country’s real estate value – at the same age, baby boomers owned 32% of the real estate value in the United States.
Instead of buying, millennials prefer renting – in fact, they account for nearly half of the tenants in the US. Besides being the largest renting population, they’re also renting long-term. For real estate investors, this means it’s easier to find long-term tenants for rental properties and consistently earn rental income.
Reason #2: Saving for a down-payment is difficult for most
With numerous people having to pay credit card, medical, and student loan debt, saving
up the 20% down payment becomes mission impossible. In fact, in some US cities, prospective home buyers have to save nearly a decade for a down payment and therefore turn to renting instead. On the other side of the coin, there are actually a significant number of potential tenants who can afford to buy, but prefer renting a place with better amenities. As a consequence, the rental market is currently thriving, which gives you the opportunity to easily find tenants and enjoy a continuous cash flow.
Reason #3: There is a shortage of starter homes
While starter homes are typically sought-after, only about 10% of newly-built houses are currently priced under $200,000. The value of affordable homes has gained more than 55% over the past five years, yet inventory has recently fallen by about 23%. All these factors have created a serious shortage of starter homes for first-time buyers.
Since affordable homes are scarce on the market, many need to rent. Hence, real estate investors will have a consistent pool of tenants for their rental properties.
Reason #4: Renting can be cheaper than owning
In many big metropolitan cities, renting is by far cheaper than purchasing a home. According to research, San Francisco, San Jose, San Diego, Seattle, Portland, Las Vegas, Denver, Sacramento, Los Angeles, and Washington DC are some of the places where homeownership is not realistic for most. In those cases, people are opting to rent to stay in the metros.
For real estate investors who own investment properties in those cities, this means a healthy rental market, with high occupancy rates, and a consistently growing demand.
Reason #5: Financing for Investors Has Never Been Faster!
As a real estate investor, you can finance your projects faster than ever. One thing to keep in mind is that no matter the type of investment you’re planning to make, you should choose a trustworthy private lender with a simple lending process and an experienced team.
Apollo Square Capital is a comprehensive real estate lender that offers multiple different loan programs for all of your investment needs. Thanks to our efficient and streamlined process, you won’t waste precious time and effort using our state-of-the-art operating system. Browse through all the programs, get in touch with our experts and find out how you can finance your next investment quickly and efficiently!