Home Rentals- the New American Dream?

USA TODAY is featuring a great article today entitled “Home Rentals — the New American Dream?

Here are some great snippets on the future of the rental market…

The foreclosure crisis will drive 3 million former homeowners to rent single-family homes between 2010 and 2015…

Single-family home rental was the fastest-growing part of the rental market, Fannie Mae says, citing U.S. Census data….

“In the next five to 10 years, you’ll see tens of billions, if not hundreds of billions, of dollars of private equity” pouring into the single-family rental business…

In the past six months, Colony Capital has bought more than 1,000 homes to turn into rentals. Most are in Arizona, California and Nevada, though Colony expects to expand into Texas, Georgia and Florida. In the next year, it will invest at least $1.5 billion in single-family rentals….

He says the growth of big-time investors in the single-family rental market is a “transitory thing” because it’s more expensive to manage them than multi-family housing. “The end game for investors is to sell these homes profitably in three to five years to owners….”

70 percent of those who lose homes to mortgage distress will own again. A recent Harris Interactive survey, commissioned by Coldwell Banker, found that 83 percent of renters want to own a home….

For Rent

What do YOU think about the upcoming rental boom?  Are you ready to capitalize on this trend?

Please leave a COMMENT or share this post!


Sand Castles vs T-Bills

Right now?

I’d rather own a sand castle than Treasuries.

Last week the 52 week T-Bill yield was .18%.  In other words…. lend the government $99,820 and they pay you back $100,000 in a year.

You lock in $180 profit on your investment.  For almost no risk.

Or… with that same $100k, you could buy a perfectly rehabbed rental house in a nice neighborhood.  At the end of the year, after taxes, insurance, maintenance and professional property management, you would passively pocket at least $6,000.

$6k in annual rental income… even if the house never went up in value.  With minimal risk.

$6,000 vs $180.

Oh… by the way… did we forget to account for inflation?

Even the most optimistic projections are betting inflation will exceed 2% for the next year.

So your T-bill is really going to lock in a loss of about -$1,820.

That’s right… it’s no risk… but you automatically lose money….

By contrast, your rental house will make you $4,000 AFTER inflation….and you will probably raise rents next year.

I guess it all depends how you define risk, right?

How do YOU define risk?  What returns are YOU looking for?  Please leave a Comment or share this post.


Florida Rental Rates to Rise in 2012

From the Sarasota Herald Tribune:

This could be the year great rental deals on apartments, condominiums and single-family homes disappear as rents move upward. Statewide, a mixture of an improving employment picture, a lack of new apartments being built and falling vacancy rates has commercial real estate broker Marcus & Millichap forecasting hikes in rental rates in Florida’s major markets this year.

After a large decline in rents that began in 2007, rates started recovering this year and will likely go up 3 percent to 5 percent in 2012.

The article goes on to summarize forecasts for rental rate increases in various markets for the year 2012, including:

  • Orlando- 3.6% increase
  • Miami- 4.3% increase
  • West Palm Beach – 3.8 % increase

To read the full article, check out the Herald Tribune’s post.

So what do you think?  Do YOU expect rental rates to go up this year?  Please leave a comment or share this post!