Even before the beginning of the pandemic, single-family home prices were on an upward trend, pricing some buyers out of their local market and extending their time as renters. According to the most recent statistics, occupancy rates for single-family investment property are averaging 95% with rent price increases exceeding any we’ve seen over the past decade and a half.
At the same time, many homeowners are looking for opportunities to tap into their record-high levels of home equity to buy a rental property, either for seasonal or full-time investment potential. If that sounds like you, it’s important to think through where you’ll buy and what steps you’ll take to protect your investment – both before and after you put it into operation. Here, then, are the best places to buy a rental property in today’s market and the right way to onboard your first renters.
The benefits of investment properties
Wondering whether real estate investment is the right choice for you? You may find it’s a good option for your financial portfolio for the following reasons:
Investment property feels more “real” than many other investment categories
If you’re someone who likes to have a solid grasp of the pros and cons of an investment, you’ll enjoy the peace of mind that comes with making decisions around real estate investing. If you know the market well, you can put your personal perspective to work to identify the best neighborhoods. If you enjoy home design, you can put your decorator’s touch to work choosing paint colors and finishes. The ability to make decisions about your investment property can make you feel more confident and in control.
Investment property is more understandable than many other investment categories
The complexities of stocks, bonds, and other investment vehicles can leave you feeling confused when it’s time to make decisions. You’ll find yourself at the mercy of a commission-driven financial advisor or led astray by the whims of the latest financial article or Twitter trend. Investment properties and real estate market conditions, however, are easier to understand, so you can make your decisions with more security.
Investment property value is more predictable than many other investment categories
Historical trends for home prices have more-or-less steadily climbed upward (with some brief corrections) since the mid-20th century. While the stock market has also enjoyed a similar trajectory, individual stocks are far less reliable.
Want to instantly increase the valuation of your investment? You can add value to a rental property with a smart update or improvements in the local market. You don’t have that kind of control over the value of your stocks and bonds.
The top 5 places to buy a rental property and why
Most markets have their share of great deals and pockets of potential. However, these five markets show particular promise in the years to come.
Encompassing Tampa, St. Petersburg, and Clearwater, the Tampa market is enjoying exceptional growth and an influx of new residents. Compared to many other metropolitan areas, Tampa enjoys relative affordability and a great mix of retirees and young professionals – both prime markets for rental property investors.
High taxes in California coupled with record-high home prices has made Phoenix a prime market for relocation from The Golden State and the fastest-growing metro in the country. In addition, it’s a favorite spot for an active retirement, with plenty of golf courses and tennis courts on offer for the scores of baby boomers making their way to the area’s gated communities.
Houston has been responsible for a quarter of the overall population growth in Texas over the past decade – and it shows no signs of slowing down. Here you can enjoy a growing job market and a lower cost of living than higher-priced Dallas and Austin. In addition, you’ll avoid the premium property prices you’ll find in those other popular Texas cities.
Atlanta is a perpetual favorite for investors, both for its perpetual growth and its relative affordability. Historically, much of the area’s growth has been driven by urban sprawl, with new construction ringing the city in ever-widening circles. Now, however, the growth of commercial projects in the city center has resulted in new pockets of construction and neighborhood revitalization that combines affordability with unprecedented opportunity.
Greensboro, North Carolina
While it’s not as large as other North Carolina metro centers, like the ever-popular Charlotte and Raleigh-Durham, Greensboro is enjoying positive growth, a diverse population, and a funky vibe that’s not quite small town, not quite big city – perfect for young professionals and families. Greensboro is focused on the future, with initiatives designed to attract even more Millennials and Gen-Z residents.
The importance of tenant screening after you purchase a property
It’s not enough to buy a rental property. You need a plan for identifying and onboarding the right tenant. A tenant screening process helps you evaluate potential tenants in compliance with Fair Housing regulations and the renter’s financial fitness. A solid tenant screening process takes into consideration employment history, credit and criminal background, and past rental history to ensure there are no red flags.
RentSpree offers a host of ways to organize your contacts and keep your rental property filled. From tenant screening services for landlord-owners to a rental client manager (RCM) for rental agents looking to stay top of mind with potential tenants, there’s a solution for every step of the rental lifecycle. If you’re a rental agent, make sure your agent profile is kept up to date so that you can stay top of mind with clients, leads, and your sphere of influence.