Be the Landlord

 



Participate in RE Beyond Ownership of your Primary Home

Have you considered investing in rental property? It may not be as big a leap as you imagine. The moderation of the residential real estate market could create opportunities for you to participate beyond ownership of your primary home. Recounted in the WSJ article linked below, home purchases by investors large and small climbed to record levels during the pandemic, reaching a high of 28% of all single-family home sales in February of 2022, up from 17% during the same month in 2019 (housing data firm CoreLogic).

 

Assess the Housing Market

 

The first step would be to assess the long-term direction of the housing market. As I wrote last week, residential real estate trends are best viewed from both national and location-specific perspectives. On a nationwide basis, there is a well-documented home inventory shortage. Match this with demographic pressures, the catch-up growth in Millennial purchases will drive home prices for years to come. Dialing in to Greater Nashville and Middle TN, the region’s numerous economic drivers and new corporate arrivals and expansions creates a Supernova environment (from my March 2022 post). This week, Focus1st published the most recent quarter in the accumulated 259% growth of Middle TN residential values over the past 20 years (5.9% annual average), below.




What's your Target

 

The second step is to gauge the return on a neighborhood and specific property, and compare it to other productive uses for your money. There are 3 financial wins with a real estate investment:

  1. Rental income. What is the anticipated rent? In June, a Redfin study stated that Nashville is second in the nation for rising rent, with median rent rising by 32 percent year over year. Let's run a study of relevant, recent rental transactions in a neighborhood. Ask me about the advantages of writing off expenses and depreciation.
  2. Equity build up. Of course the tenant is helping you pay down your mortgage each month.
  3. Appreciation. Refer to the 20-year history above. But better to go deeper and weigh the slightly better appreciation of a single family home against the ease of maintenance with a townhome or condominium.

 

Click to watch my 90-Sec Video w personal rental ownership experience



Next

 

I would be happy to learn about your interest in rental property investments. Together, we can develop a financial model to form the ideal scenario for purchase price and rental rate that would be the backbone of your real estate win. billdiebenow@parksathome.com / 615-337-3660



Click to read WSJ article on new trends in rental investments





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