IS IT WISE TO VENTURE INTO RENTAL PROPERTY?
A great strategy for portfolio diversification would be to own a real estate for lease. In a recent report, it was stated that the number of households renting from 2005 to 2015 went up by nine million, which is the highest climb over a decade since 1965. Moreover, demand for these type of properties are seen to rise further this year, so it might be the perfect time for investors to consider running one.
Estimates suggest that rental land rates is set to increase by 1.7% until the third quarter, and prices are predicted to be at high in several states, including Seattle. This is a positive initial signal that the market is in for an influx of residents looking for a home which will provide them with the same amenities as a big city on a different cost.
The median value of renting is currently at $1,100 for a single bedroom, while a dual room space falls at $1,260 monthly. The hike in prices may be frowned upon by renters but investors will have a contradicting reaction since this can actually be beneficial for them. An assessment disclosed that rates have started to jump by Q3 of 2015-2016, particularly in Seattle, which saw a 16% increase over the year.
While this sound like a major source of return for owners, it is important to take into account operating expenses that will be deducted from the earnings. Furthermore, one of the most important factors of managing this kind of property is choosing the best location--know which cities are mostly selected by people. A particular example would be the millennials who will be entering fresh from college and in search for affordable living quarters. Data unveiled that majority from this population are under 35 years of age and earn roughly $25,000 annually. As demand continue to surge in key areas, costs will also boost accordingly, which will provide investors with a higher profit.
Over all, while handling this business has its bumps because a lot of things need to be supervised, including tenants and maintenance to ensure a steady source of income. Despite this, it is a good way to hedge against a volatile market, as long as you make sure to familiarize yourself with risks at present and do a research of the marketplace before taking on a landlord responsibility.
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