due to market, more people renting?

Question

due to the horrible market right now, i know houses in my neighborhood are taking 5-7 months to get bought.  are more people renting?  in my position, a college student with a small savings of about 10k, should i purchase a small cheap rental property and keep it for a year or 2 and roll it over to a rehab?  I kinda wanted to start rehabbing when im 23, which is in 2 years, but i could purchase a rental property now because it requires less capital. need help.

Account Closed · Answer

Rental market here really sucks. There aren't many callers and about 80 % of them state that they are going to get settled in for a short while and then find something to buy.

The other 20% are your typical bottom of the barrel tenants with the 415 credit score, a prior landlord who says he will shoot them on sight if he ever sees them again, and no job.

I just had a gal ask me to hold the house for her until Monday while she decides whether she wants to live in this town or in another state.

My other caller today doesn't have any money, but she and her 2 roomates hope I will hold the house for them until July, while they make payments on the deposit.

My rental units are competing against nearly new houses that were built to be upper middle class homes and not rentals. Now even the druggy tenants want to hold out for granite counertops and a 3 car garage.

Real estate is selling agian, and I will be very glasd when some of the excess inventory is sold off and out of the rental pool.

Lynn Z · Answer

I just had breakfast with a 2 year investor who has bought a good of nice properties with his father.  He's learned alot but he was amazed at one girl who kept emailing him (Craig's list responder) telling him she really wanted the house.  He kept telling her to go to his property management office and fill out an application.

He finally checked out facebook and what was an entry there for all to see? 
Being evicted.  Now isn't that precious as we say down South?

Mark N.A · Answer

invstr --

If you can leverage your money into a two or more bedroom rental (at the right price), then live in it and rent out the other rooms, you will be ahead of the game.

But it is imperative that you know your market and your area.  Not all is rosy eveywhere in rental-land.

Here where I am I've got an upstairs/downstairs apartment in a low-income area that's been available for five weeks and I've only showed it once.  I've also got a college/blue collar 4/2 that's been available for two weeks with nary a showing.

If the phone was ringing and I was turning away applicants because of failed screenings it would be one thing, but this deafening silence is just... plain... unsettling.......

Jason Hanson · Answer

Buy and hold. Owning the property for the long term will always be the true way to wealth through real estate.

(another way that I have heard, is that you go on tv, rip people off and you never have to own a single piece of property or even know anything about real estate in the first place)

Rajendra Mackinley · Answer

Plutopia is right it's happening here in my country...

Michael Rossi · Answer

...or buy now and allow your rentals to support you for a lifetime!

Mike

Will Barnard · Answer

Rental demand in the areas I invest in is also high and vacancies at all time lows. Buy now and sell when all the sheep finally start buying.

Michael Rossi · Answer

Yes, the rental market here has improved significantly!  High demand, low supply.

Mike

Lynn Z · Answer

I was able to go up $50/month on two small houses and $150 on a 3/1 apartment in an ideal university area.  Of course rent was down to $1000 instead of $1150 because 2 can't afford $1150.  I'm evicting one of the present tenants for failure to pay the rent this month   Turnover is pretty steady after 1 year lease if you get that far.  Rented it up off of Craigslist sight unseen.

David Hadley · Answer

I don't know about your market, but in mine rents are increasing.  I believe it's to due to a couple of factors:

1.  We're currently experiencing a credit crunch.  People who can afford a home, can't get a loan due to the tightening of lending standards, so they must rent.

2.  We have a lot of people who have lost their homes to foreclosure due to ARM rate resets.  These people still have jobs and still need to live in the area.  At the same time, the houses they've lost haven't made it through the foreclosure/REO process back onto the market.  The net result is rental demand is up while supply is down.

Personally, I expect rents to level off in a few years and eventually decline a bit as these things sort themselves out.  But timing is everything and it's a good time to buy and hold rentals, at least in my market.

If we experience a severe recession, however, all bets are off.