The Rising Rental Market is poised to make many investors Millionaires! Will it be You?

The Rising Rental Market is poised to make many investors Millionaires! Will it be You?

The Rising Rental Market is poised to make many investors Millionaires!  Will it be you?

By John Tiner, CEO of Tiner Properties, Inc.

There is one bright light in the economic downturn.  Rentals are hard to come by. Purchase prices are still only half of what they were at the top of the market.  Interest rates are at lifetime lows, good renters are lining up for quality homes, and rents are on the rise.

Many homeowners have been forced to opt for short sales or foreclosures.  Often, these are responsible people who have a steady income, but have simply had hours cut or found themselves in the painful position of being ‘upside down’ on their mortgage.  They are now becoming a growing group of desirable tenants, looking for clean, quality homes to rent.

With a full half of all mortgage borrowers under age 40 underwater in their mortgages, this trend is likely to continue.  If you are lucky enough to have weathered the economic meltdown with cash in hand and your credit unscathed, there is an incredible opportunity awaiting you.

According to the CNN Money July 2012 article ‘Become a Millionaire Real Estate Mogul’ the path to become a millionaire takes planning and strategy, but can be realized by investors without taking undesirable risk.

Their formula?

  • Own at least three rental properties relatively close in proximity to one another.  Many investors start with one and have a plan to build their portfolio systematically.
  • If you don’t want those late night phone calls about plumbing leaks, hire a reputable property manager.
  • Begin your search near large employment centers (like Aerojet-General Corporation) or universities, (such as Sacramento State University or American River College) where strong rental demand will ensure profitability.
  • Pay cash if possible (they also cite creative methods to use financing to your advantage).

Relevant information for investors in Sacramento residential properties:

  • Rental values have increased substantially in the mid to upper-end rental market – up to 7% or more in the past year.  This trend seems very likely to continue.
  • Those tenants who were previously homeowners and opted for a short sale or foreclosure will likely remain renters for a minimum of 3 years.  Many are not anxious to own again after their painful experience, but retain pride in the home in which they live.
  • As of May, 2012, a full 58.3% of all resales were ‘distressed’, giving investors a unique opportunity to purchase at record low prices.
  • The number of investment properties available for rent in Tiner’s vast inventory for rent has dropped by almost 40% from last summer – tenants are staying put – a good sign for investors.
  • Average Days on Market – calculated from the time a home is ready to show until a tenant has signed a new lease – has dropped from 30 days in the summer of 2011 to 14 days this summer.
  • Vacancy Factor – (total percentage of rentals currently vacant) are approximately 3-6% (Although Tiner Properties currently enjoys an impressively low Vacancy Factor of only 1%)
  • Foreclosed homes and short sales in Sacramento remain a great value for investors.
  • Because of the low prices for existing housing, it has not been cost-effective for builders to continue to build new homes.  This means that the supply of homes in the Sacramento region is not keeping pace with normal growth.

The LA Times, in an article published earlier this spring, noted that while home prices have hit their low, new data shows that the rental market is on an upswing.  Rents are increasing, and there is a steady supply of renters who are waiting for a quality rental.  They further surmise that the upswing in the cost of rent is a key indicator that the housing market is headed into recovery.

Demographics of renters: While supply of available investment property shrinks, the demand for rentals will continue to grow.  The huge Gen-Y demographic (or ‘Millennials’, to whom they are often referred) represents upwards of 80 million young people coming of age – and most of these will rent for the foreseeable future.

CoreLogic, a financial, property and consumer analytics firm published their ‘MarketPulse’ report which found that single-family rentals represent a $3 trillion market.

The California Department of Transportation forecasts a 5.7%  population growth for Sacramento County over the next three years, which points to a thriving rental market.

What does all this mean to you?  The potential to cash in on a perfect opportunity.  This is the prime time to purchase Sacramento residential rental properties and build your portfolio.

Let Tiner Properties help you minimize your risk and maximize your investment:

  • The Tiner Real Estate Team – John W. Tiner has closed over 500 real estate sales
  • Our inventory- Tiner Properties manages over 1,000 rental properties
  • Property management skills and experience – we manage over $250 Million in property for investors – our professional management record is outstanding.
  • Relationship building – we pride ourselves on our ethics and integrity – and believe that long-term relationships are the cornerstone of our business.
  • All investors are valuable – whether you own one property or fifty, our focus is on protecting your investment.

 Investor/Client Testimonial

 "6 months ago my research caused me to recognize there was a fantastic opportunity buying rental properties in Sacramento. John Tiner and the team at Tiner Properties, Inc, have been a Godsend for me.  John assisted me to find areas to buy where there are outstanding rent values (as compared to sales values) - and helped me avoid problematic neighborhoods.  John helped me navigate the short sale process and close escrow on a dozen properties, and then helped me get the properties rental ready and rented to a well-qualified tenant.  It has been fantastic to work with someone who knows the whole process and can make it seamless from research to rented."  Doug W.

Are YOU ready to take advantage of an exciting and profitable opportunity in the Sacramento residential real estate market? Call John today (916) 402-3095.

Article Sources:

http://money.cnn.com/2012/07/20/real_estate/millionarie.moneymag/index.htm   

http://articles.latimes.com/2012/mar/13/business/la-fi-rents-20120313  

http://realtormag.realtor.org/sales-and-marketing/feature/article/2012/01/3-ways-take-advantage-rising-rental-market  

http://www.dsnews.com/articles/corelogic-best-places-to-invest-into-single-family-rentals-based-on-cap-rates-2012-04-11

http://www.corelogic.com/about-us/news/corelogic-releases-april-marketpulse-report.aspx