In most areas of the world, house prices tend to increase. In many countries, a lot of people are preferring to rent a house instead of buying. This means that it’s an opportune time for many investors. The sector is booming and it is the perfect time to take advantage.
In this article we want to explain how to take advantage of this opportunity and earn high returns without the need to buy a house. The first important step you should follow is to do your own research on real estate directories, where you’ll frequently find an area called real estate agent near me. Some directories even have a Google Map search in their portal where you can put your address and you’ll be able to find agents around the area where you live or where you the property you are interested in is located.
Single Family Rentals [SFRs] are properties intended exclusively for tenants who constitute a family. There are nearly 16 million SFR units in the United States, accounting for about 11% of the total housing stock, and demand keeps increasing. Naturally, this growth is related to the increase in house prices that exceeds family income, but there are other factors as well. The consequences of the 2008 recession and a difficult labor market also play their role in this equation.
For investors, the SFR market has some special advantages. The returns are not directly related to the ups and downs of the stock market, and your investment is potentially much safer and more stable than it would be in retail properties. The cultural shift towards SFRs is evident:
Even during the chaos of 2020, the market has remained robust. SFR is one of the few asset classes that has seen demand grow since the pandemic, in part because people are now looking for a piece of their own land. SFR properties are typically more suburban, detached, and with access to outdoor spaces, as opposed to city center apartments. Rising unemployment and job insecurity naturally make affordable rental housing a more attractive and attainable proposition as well.
Stability and inexorable growth can also be compounded by ever-increasing rental rates. Single – family rentals increased about 6% in the past year alone, hitting a 16.5-year high in July 2021.
Investments in SFR not only provide stable rental income, but can also create long-term real value through capital appreciation. Compared to commercial property, it also tends to have shorter vacancy periods. Also, the type of tenants who like houses in this sector are generally quite self-sufficient, needing less management and maintenance than individual tenants, for example.
While past performance does not necessarily indicate future returns, recent performance is encouraging. In recent years, annual returns on single-family home portfolio have exceeded 10% on average per year.
With around 35% of residential properties in the United States classified as SFR, this is clearly a huge potential investment market. So, who exactly are the investors?
A dominant 88% are so-called occasional investors who own between 1 and 10 properties and seek safe and stable returns with relatively small sums. They are not professional institutional investors; Rather, they are ordinary, hard-working people who have discovered that SFRs can be a great investment asset.
However, this is not the whole story. Around 1% of SFR’s units are owned by institutional investors, who typically have portfolios of around 2,000 homes. The rise of professional management companies and recent advances in technology have made it easier and more economically viable to operate on this scale, and in some markets, such as the UK, institutional funds are beginning to enter the sector.
Regardless of the type of investor you are, statistics back up the rest and define the power of this market. Since the start of the 2020 pandemic, it has grown by an incredible 650%, outpacing all other property types.
Rising house prices are a global phenomenon, but are often felt most acutely in large urban centers like Detroit and Chicago. Across Chicago, home prices are up 13% year over year, while in some of the most popular suburbs the increase is 20%, with as many as 20 families applying for each property.
The Avg. home price in Chicago is currently $300,430, while the Avg. household income is $75,379. As a result, a typical family will be at their maximum loan limit when trying to buy a home. For these home seekers, SFRs are an affordable, attractive alternative and a potentially lucrative investment proposition for those with funds to capitalize on.
In Detroit, the story is similar. There, house prices have increased by 11.6% year-on-year and 53% of residents are renters, so the demand is exceptional. The difference in Detroit is that the purchase prices are quite affordable, making it an excellent investment prospect.
The right real estate agency will help you access the incredible investment potential of SFRs in an affordable way. Even if you don’t have the funds to buy an entire property, their crowdfunding platform will allow you to enjoy the advantages of investing in the most attractive international real estate markets from as little as $1,000.
You can invest even online and start receiving rental income quickly, as well as the possibility of extra appreciation gains when selling the property at the end of the investment period.
Hi, my name’s Gina Long. I'm a successful businesswoman and love to stay healthy. I consider health and wealth to be an essential part of my makeup. In this blog, I talk about these things that are essential to me and hopefully my readers.
Click to read on
