The Great Recession ended, according to U.S. economists, five years ago — so we can all stop worrying about the state of the economy now, right? Riiight. No matter what the economists tell you, the real estate market may be on the rise, but that’s only because it was beaten down so dramatically.
Download Your FREE guide to evicting a tenant!
We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.
Rewind to 2009
Back at the beginning of 2009, the housing market was at its lowest point since the National Association of Home Builders started keeping track. So many young people moved back in with their parents when the economy tanked that the country netted some 2.5 million new people and only sold 400,000 new homes.
That’s more than 2 million people that simply didn’t affect the housing market: they didn’t rent, lease, or buy.
Then to Now
Since then, every year our need for new houses has taken into account not just the population growth, but also the trickling back out into the world of those 2.1 million people. This means that most standard calculations are off, and it means that (in short) we’re not building enough houses for everyone.
Which, in turn, means that demand for houses is high, and supply is short.
A New Wrinkle
At the same time, hundreds of thousands — probably more like millions — of families faced with foreclosure realized that they could just barely scrape by if they rented out their homes to other people while they themselves went to live with their families and friends. This is actually a pretty normal thing to do, all things considered.
But what came next isn’t.
As the economy has recovered, new mortgage laws have come into effect that have shut out a significant section of the American populace from getting a mortgage. This, of course, means that said significant section of the American populace either has to stay at home with Mom and Dad, or they have to rent.
And because they’re (mostly) choosing to rent, demand for rental space is going up — which means rents are going up. Which means that many of those one-time homeowners who started renting in order to save their homes are realizing that there’s pretty good money in being a rental investor right now.
But what they don’t want to be is a landlord. They started off grudgingly taking on the job because they didn’t have a choice, but as their families recovered their economic footing, they started farming the responsibilities of property management out. They have full-time jobs, kids, and possibly even second homes that they’re paying mortgages on using the rent from their first homes.
The result of all of this is that there are meaningful quantities of rental homes out there that are owned by people who never intended to become landlords, never wanted to become landlords, but are now somewhat ‘hooked’ on the income stream their property provides.
If you can tap into that market of new owners — position yourself as a property manager who can take the reins and deliver them a decent ROI with absolutely minimal time or effort on their part (passive income) — you can leverage their desire to not be ‘the landlord’ for everyone’s mutual benefit.
Have you ever played the role of property manager? Do you know any folks who own property but don’t have the desire or time to manage it?
Jump in and let us know what you think below!