This is the golden age of owning rental properties, and you’re right on time. Market conditions are primed for owning Single-Family Rentals (SFRs), since they provide investors with the ability to diversify their portfolios and the potential to generate monthly cash flow that outpaces inflation.
Here are the three reasons why you should invest in Single-Family Rentals right now:
1. Rental Boom Forecasted for 2016
Household formations are increasing quite rapidly fueled by a strong economy and growing job market. According to CoreLogic, it is expected that over 1.25 million households will form in 2016. These new households are expected to choose renting over homeownership, which further increases the demand for SFRs.
Coupled with the fact that homeownership rates have been on steady decline (source: US Census), these new household formations will be choosing to rent instead of buy.
2. Vacancy Rates are at an All-Time Low
With an increased demand for rental properties, vacancy rates are at, or near, 30-year lows. This means that owners of SFRs can expect their cash flow to increase as rents increase at a rate that outpaces inflation.
3. Single-Family Originations Predicted to Fall 10%
First time homebuyers, often referred to as single-family originations, are predicted to fall by as much as 10% percent (source: U.S. Census), and 2016 will continue with the downward trend of home ownership. This further fuels the need for SFRs as more households choose to rent over buying a home.
With the market primed for owning single-family rentals, now is the time to invest.