SINGLE FAMILY HOME RENTALS ARE A GROWING OPPORTUNITY

By
Mortgage and Lending with Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 NMLS # 6869

“Single Family Home Rentals are a Growing Opportunity”

Probably not for the reasons that you are thinking. The last time there was the same type of opportunity, was the late 80’s and early 90’s.

Single family home rentals are a growing opportunityIn many parts of the country, real estate lost 50% of its value. There were many folks that lost their home, just like now. There are time periods that this happens. Many of these folks will want to become homeowners again. Many will rent homes, until they are able to buy again.

Many of these folks get into lease option agreements or just rent single family homes, so that their family can feel better about themselves.

There will become a point in time, that different types of financing will become available for folks that lost homes. Right now, with re-established credit FHA guidelines allow for someone to buy again, 36 months after the foreclosure or short sale. Not every seller is willing to wait 3 years.

 

Single Family Rentals Now Exceed Multifamily

By: Steve Cook

While inventories of homes for sale have been shrinking this spring, MLSs are filling the void with rental listings for single family homes that until recently were foreclosures. Some 16.1 percent of all listings on MLSs today are rentals, more than double the number in 2006, according to some reports.

Single family rentals are $3 trillion business today and growing as investors turn to real estate and opt to rent out the bargains they buy until prices improve. Today the single family rental market accounts for 21 million rental units or 52 percent of the entire residential rental market, according to a new study by CoreLogic economist Sam Khater.

Yet the single family rental market is poorly understood and almost invisible to economists and journalists because virtually all rental market data tracks multifamily properties and either ignores the single family segment or lumps it together with multifamily.

“Single family rentals are very distinct from multifamily and they behave very differently,” said Khater in an interview with Real Estate Economy Watch. For example, on a per unit basis, rents for single family rentals run 1.5 to 1.6 times higher than multifamily. Unlike multifamily, millions of single familyrentals are listed on MLSs by real estate brokers, many of who represent new owners in acquiring investment properties. As the for-sale inventory has trended down since 2005, the rental share rose 13.3 percent last year alone. As of the end of last year rental closings were up 11.5 percent year-over-year while prices fell 9.8 percent during the year. Demand is strong. The national average months’ supply for single family rentals was 4.5 months in December compared to 6.2 months for homes listed for sale.

Another important difference is the nature of the tenants. Single family rentals, usually stand-alone properties in ownership settings, appeal more to families. In fact, the typical SFR tenant is a family that has just left a foreclosure and can afford to pay the rent on a former foreclosure but could not make the mortgage payment on their old home, perhaps because they bought with alternative financing or purchased at the peak and could not get a modification when their home lost value. Over the past five years, foreclosures have turned more than 3 million homeowners into renters. Typical multifamily tenants, however, are younger, generally single and more mobile, and have never owned a home.

Khater found a strong relationship between distress sales markets and single family rentals. Census data shows a correlation between single family rentals and the hardest hit areas of the so-called “sand states”-Arizona, California, Florida and Nevada.

Investors buying REOs and short sales in foreclosure markets convert them to rental units and homeowners in the same locale who have lost their homes to foreclosure rent homes that until recently were owned by other families who suffered the same ill fortune.

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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com

www.righttracfg.com

www.joepetrowsky.com

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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Charles Stallions 05/06/2012 08:49 PM
Topic:
ActiveRain Community
Location:
Connecticut
Groups:
Mortgage Solutions
Wake Up Brokers
Connecticut Professionals
Consumer Mortgage Tips
All About Mortgages/Mortgage Networking
Tags:
home values
real estate
short sale
foreclosure
fha
homeowners
investment properties
rent
single family home

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Rainer
146,012
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

I agree, someday more types of loan options will become available. It'll be like a big cloud has been lifted and the flood gates will be opened. I like to dream big!

Have an AWESOME evening!

 

May 01, 2012 06:11 PM #1
Ambassador
1,985,005
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

Joe you are right about those who are losing their homes now, wanting to purchase later.  And we can help them position themselves to purchase once that time come.

May 01, 2012 06:41 PM #2
Rainmaker
1,871,206
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO

Joe

There are great buying opportunities in the real estate market today.

Good luck and success.

Lou Ludwig

May 01, 2012 07:36 PM #3
Rainmaker
1,160,989
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Joe.  Within two or three years financing will be available for those who lost their homes but paid the other bills.

May 02, 2012 03:27 AM #4
Rainmaker
1,433,141
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

I am sure while everyone is panicking we will be making money in the market. It is always time to invest in real estate.

May 08, 2012 07:28 PM #5
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Joe Petrowsky

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