Does a high foreclosure rate equal great rental market??

Question

Just wondering what the thoughts are on this?  If areas have a high foreclosure rate, is there a high demand for rental properties as people still need a place to live?

A friend of mine was telling me he knows someone who just bought a property is Las Vegas, and the agent had 3-4 renters lined up for him.  After 80% down, he will be 100-200$ cash flow positive.

Rich Weese · Answer

I can speak firsthand for So. Texas. In the 2 years I've been  buying, the demand for rentals has never been as strong. I've literally had a waiting list for several cities I own homes in. I'm finding some of that in Dallas this week. I'm looking at apt buildings, and it amazes me how many are 90% or better.
      I think it is simple economics as long as there are jobs. People lose their home to foreclosure. The bank takes it over and sits on it. This is a double whammy. Same demand for  housing. Less available due to banks holding them.We also have more people coming across the border because of problems there. I'm not losing a single day of rent when vacancies happen the last 4-6 months.

Timothy W. · Answer

No.  Foreclosure rates help you get property at the right price, but you need a market that has anchors to keep people there and enough of them employed.

Scott M. · Answer

Hey Larry - way to spread rumors!  I love it when people bash Detroit just becasue it is such a popular thing to do.  Say what you want about the city but you can't deny (if you know the trut truth that is) that is has one of the most stable rental markets in the US.

I have invested in the city for over a decade now - hundreds and hundreds of homes and 99% of them rented in 2-3 weeks after move out and that is for both first rents and re-rents.

The unemployment rate is sky high in the city but there is a very stable rental market in Detroit...this year alone 20 homes bought / rehabbed and 19 homes filled in under 3 weeks - 1 home took 5...each had 2-3 qualifyed tenants to pick from.

As for the OP question - it isn't that black and white.  No "formal equation".   Sometimes yes sometimes no.

Kyle Richter · Answer

North Houston too...Great place to have rent houses...I just bought a new place for myself....had people moving into my rental the same week I moved out...

Robert Mack · Answer

Rich,
What did you find in SW FL when you visited there?  Is the bad job market keeping vacancy's high there?

Mark N.A · Answer

It's always a combination of location and market.

My college rentals are in demand as enrollment increases.

My low-income rentals are soft as businesses/government cut back hours and renters move back in with relatives.

Unfortunately there's a steady supply of investors bidding up foreclosure prices in prime rental areas, sacrificing cash flow for expected appreciation.

Maybe they're geniuses but it's not a bet I'm willing to make.

Larry Seith · Answer

I agree with Mike that there is not necessarily a correlation. In a depressed job market (Detroit, for instance) there will be lots of foreclosures but since there are no jobs available, people will leave the area and the rental demand will drop.

Alex K. · Answer

Sorry guys I meant to write 20% down in my original post not 80.  Wondering if anyone has opinion on the vegas market specifically?

Jesse Ramirez · Answer

My theory just went down the drain.

Michael Rossi · Answer

No.  There is not necessarily a correlation between a high foreclosure rate and a high demand for rentals.  It depends on the specific market

BTW,  putting 80% down and getting $100 to $200 per month is NOT a good deal!

Mike

Does a high foreclosure rate equal great rental market??

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