4 Great Reasons to Invest in Rental Properties
Renters Warehouse Blog
This is a guest post from Colony American Finance - a leading provider of financing solutions to residential real estate investors.
With Q1 in the books, 2017 continues to show us why it will be an exciting year for real estate rental investing. From the Millennial's mindset that renting is better than buying, to the Fed's announcement to trim down the $4.5 Trillion debt, 2017 will be nothing short of a massive opportunity for real estate investors who can move quickly in the acquisition of properties in emerging markets.
If you are new to investing in real estate, more specifically in the rental property space, fear not! Below you will find the top 4 reasons you should consider investing in rental properties and take full advantage of the unique opportunities at hand.
#1 Emerging Markets with Low-Cost Inventory
As the Trump Administration continues to push larger companies to "put America first," we see several markets emerge as optimal rental places. Cities like Omaha, Des Moines, Detroit, Cincinnati and many others, are all experiencing an emergency due to three key indicators: Quality of Life, Affordability, and Economic Strength.
When you consider these key indicators and then couple it with the fact that these areas still offer properties at prices below the national median home price, they become ideal markets for real estate investors to pursue. This low exposure/minimal risk is attractive to almost any investor, whether novice or seasoned, and encourages a strong rental possibility.
#2 Rentals Are at an All-Time High
The resilient strength of the rental market here in the U.S. has been incredible. Two main demographics have fueled the rental market and continue to do so. Folks who lost everything including their hats in the '08 financial crisis maintain a bitter taste in their mouth for homeownership and often prefer to rent rather than go through the devastation they experienced with the downturn. Additionally, the "Millennial Effect" continues to be prominent across the United States as these renters prefer a lifestyle of mobility over a fixed 30-year mortgage.
RealtyTrac stated that "a growing population of millennials should translate into a growing demand for single-family rentals." They also reported 17 prime SFR millennial meccas across the United States. States like Florida, Texas, North Carolina and Georgia topped this list and continued to harbor America's Millennial demographic.
#3 Harness the Power of New Acquisition Credit Lines and Rental Portfolio Loans
Never before have we seen the powerful financing tools that are currently available to independent real estate investors. As early as five years ago, "hard money" loans seemed to be the only financing option for rental portfolio investors. And, due to the high costs and high-interest rates, many investors would not find enough margin in their deals to make it worth their time. That is no longer the case.
Very specialized lenders, like Colony American Finance, offer Acquisition Credit lines and Rental Portfolio Loans that give investors the financial power to invest like an institutional player. The acquisition credit lines are easy to qualify for and the portfolio loans to refinance assets are mostly asset-based which continue to make these products pro-investor.
#4 Create Passive Income and Build Wealth
Because properties can be acquired at such a low costs in many emerging markets across the U.S. and financing options continue to expand, even in prime markets, it is easier than ever to find properties that not only provide cash flow but create passive income for you above and beyond your carrying costs. As they invest in 1, 5, 10, even 20 properties, real estate investors create a tremendous amount of passive income. Ultimately, the goal is to continue to grow this model to the point where passive income becomes so substantial you can't buy assets quick enough.
Couple this notion with the fact that values continue to be on the rise, the optimal buy-low, sell high scenario is created. Additionally, as you amass your real estate empire, your asset worth skyrockets because of the equity that has continued to build over time - this happens all while you allow the assets to essentially pay for themselves.
Colony American Finance is the leading private lender to residential real estate investors. Looking to explore your financing options? Contact Colony American Finance. We provide attractive long-term debt products for stabilized rental portfolios, as well as credit lines for new acquisitions. For more information about how Colony American Finance can help grow your rental and rehab business, please call Mario Navarette at 949.936.0007 or email [email protected]
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