Saturday, March 6, 2010

The Rental Market Is Picking Up In A Major Way

I've never seen rental properties rent as quickly as they have been lately. With almost no vacancies to speak of, I find myself looking to add additional properties to the portfolio.

As I've mentioned before, investing in today's real estate market is setting the stage for phenomenal returns. Price appreciation will come in due time, but renting your investment property for profit has never been better if you've been buying distressed priced foreclosures and short sales. In the Arizona market, homes in the 1,200 - 1,500 Sq.Ft. range are selling for as little as $40,000. These aren't old fixer uppers either, these are homes that are only 3-5 years old. At that price, you could charge as little as $750 per month rent and still draw a 22% return per year or a 100% return of principal in just over 4 years.

Todays rental environment is very different from years past. In a normal rental market, there is a stable and fairly predictable movement of tenants in and out of rental properties. Today, the rental market has been flooded with families that have lost their homes due to foreclosure, short sale, and bankruptcy. This increase in renters into a once stable market has created a shortage of desirable rental properties (SFR's, not apartments), and it's not unusual to get a dozen or more calls within hours of a vacancy being advertised. Since foreclosures, bankruptcies, and short sales have the potential to tarnish one's credit report and FICO score for as long as a decade, the rental market for investors looks to be quite lucrative for some time.