What Will 2016 Bring For Rental Property Investors?

We’re only a month into 2016, and already things are looking very promising for rental property investors. Last year saw steady growth in a number of areas, including the housing market, the economy, and employment. If things continue on this path – and it looks like they should – 2016 is going to be a very good year for investors. Here’s what we’re expecting:

Continued Demand for Rental Property
While there are still plenty of folks eager to buy a home, renting continues to be the preferred option for most people. Over the last 18 months, the number of people renting has grown by more than 2 million, while the number of homeowners has decreased by about 400,000. And we’re seeing this played out in numerous housing markets, where the rental market has veritably exploded. Some of this is due to the number of new households that have been formed – with 1.25 million more anticipated in 2016 – but other reasons include rising home prices and the greater flexibility that comes with renting. All of this means that the demand for rental property will continue into 2016, which will result in a few other positive impacts for investors.

Lower Vacancy Rates
As a result of this increased demand for rental property, investors in 2016 are predicted to enjoy reduced vacancy rates. Nothing hurts a landlord like an empty unit, and keeping tenants has always been a top priority for investors interested in steady cash flow. Right now, it’s looking like vacancies will less of a concern, however. With the current economic climate and the ever-growing demand for rental units, the risk of a dealing with a vacancy will be greatly reduced. This is great news for investors, because Lower Vacancy Rates = More Income.

Rents will Keep Rising
Rising demand for rental property will also equate to higher rental rates in the coming months. We’ve already seen this happening in the last year, and analysts predict rents to continue to rise, with an overall increase of 3.5% in 2016. Why? Because demand is quickly outpacing supply. With more households being formed and most of those people opting to rent, there’s a inventory shortage. Because of this, investors are able to raise rent fees, which means more money in their pockets. This is a good thing too, because….

Home Prices are Also Increasing
It costs more to buy a home today than it did a year ago. People are shelling out more for the properties they buy, with a price hike of 3 to 5% expected for 2016. For the average homebuyer, this news is met with mixed feelings. Sure, it’s an indicator of a growing economy, but it’s also more cash they must part with. But for investors, this is positive news. The properties they own are more valuable, they have increased equity, and it’s a gateway to building more wealth. From a larger perspective, increased home prices are also a sign of a healthy economy, which has positive impacts for everyone.

If you’ve been thinking about rental property investment, 2016 is the time to make your move. Likewise, if you’re already investing, you may want to consider adding to your ownership with another property or two. With so many advantages for investors, now is an excellent time to own rental property.