How much interest is your savings earning in that money market account or CD? If your answer is about1% then you’re right there with the average American, and that puts you between 1.5 and 3% behind the growth that folks who’ve made the move to invest in rental property have seen.
US News is reporting that rent prices rose 4% in 2011, and the National Association of Realtors are projecting an identical rise in 2012 and again in 2013. How does that play out for the investor though? What’s driving the increased prices?
For the answer to the second of those questions, it’s a simple matter of supply and demand. The two are inversely related, meaning that as supply increases, demand decreases and as supply decreases, demand increases. There’s just not enough on the market to rent, which is why our office’s new property management service has qualified renters that can afford $1400/month in rent that don’t have a place to go. More renters than rental units available means it’s a “landlord’s market” right now in the world of investment properties.
So to the other question, what does this mean for the investor, or even the first time investor? In addition to the current “landlord market” in the rental game, housing hasn’t been this affordable in a long while. If your CD can’t do better than 1% returns, what’s to stop you from looking at a better return with 4% projected growth annually over the next 2 years?
There are a lot of Americans who are starting to find the jobs that get them out of Mom and Dad’s basement and back out into living on their own. They are leaving home (again) and finding places to rent. Somebody is cashing that rent check every month, and that somebody could be you.
We’d be glad to help you find an income property to invest in, so let us know what we can do for you!