If you’re already investing in rental property or thinking about doing so, then you know you have all kinds of options for the spaces you would like. Commercial property in strip malls, office buildings, or standalone businesses is popular right now, but so are residential properties for rent. Apartment complexes and townhouses are just the tip of the iceberg, however, because rental homes are also a great alternative to more traditional residential rentals.
What do you need to know about how to invest in rental homes? Here are three things that you may not have known about this type of real estate:
- Rental houses can turn a profit. Of the homes sold in 2014, only 33% went to new home buyers; the other buyers had all bought homes before. Although home prices are low, the barrier to entry can be high for those who can’t afford closing costs and other fees. Renting, therefore, is a better option for many people, and even though they can’t pay thousands of dollars in closing costs, they can still afford the costs that a monthly mortgage would bring. This makes it possible for property owners to charge more than they might per unit on a townhouse or apartment.
- It’s possible to build new units. There are currently around 115 million occupied housing units in the United States. However, Forbes estimates that about 1.5 million housing units need to be built each year to keep up with population growth. This offers plenty of chances for property owners to build their own units for rent. Houses, including luxury homes, and condos are especially hot right now, especially among certain demographics.
- Your target audience may not be who you think it is. Although the typical first-time home buyer is 31 years old, they aren’t the biggest spenders when it comes to buying a house. The average repeat home buyer was 53 years old in 2014, and many of them are looking for housing that will accommodate older Americans. Those approaching their senior years want housing that allows them to downsize if needed, and single-floor houses is especially popular among the aging. Rental homes for seniors are yet another growing market, and they’re appropriate for those who aren’t looking for another 30-year mortgage.
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