According to leading CNN Money experts, homeownership rates are currently at all time lows. Rental prices, however, are increasing steadily and are driven in part by increased demand and lower turnover among current renters. Forbes Magazine recently noted that San Francisco, California, is experiencing the greatest annual increase in rental rates at 14.9 percent; however, other cities across the U.S. are also seeing significant upward movement in the rents charged for residential properties.
With potential rental revenues on the rise and real estate prices remaining largely stable, now is a great time for investors to realize greater profits by diversifying their portfolios to include residential rental properties. Making the move to property management can be a financially rewarding step. Still not sure if investing in income property is the right fit for you? Here are three reasons why you may want to consider becoming a landlord in 2015.
Reason #1: Affordable Investment Properties Are Available
Although the Federal Housing Finance Agency reports continuing increases in the cost of residential properties in the U.S., this overall trend has not yet reached critical mass. Affordable homes and rehab properties are still widely available throughout the country and can provide real options for aspiring landlords. By performing the necessary due diligence on properties under consideration, investors can often achieve higher revenues from their rentals and increased value at the time of eventual resale. Online real estate platforms are available to project likely appreciation and cash flow for properties, allowing even new-to-the-game investors to make the right moves in the real estate marketplace.
Reason #2: Timing is Everything
With residential rents continuing to rise, the potential for profitability is, as expected, also increasing. Recent data released by Zillow indicates that renters should expect to allocate approximately 30 percent of their monthly income to housing costs. This is in sharp contrast to the 15 percent paid on average by homebuyers across the country. For investors, this 15 percent differential represents solid profit and increased revenues that can be used to leverage further purchases and rehab costs. Most real estate analysts are in agreement that now is the time for investors to make their move in the residential real estate market.
Reason #3: You Have the Right Tools for the Job
The innovative and unparalleled algorithms used by the Revestor online search service are designed specifically to help real estate investors determine which properties are best suited to their financial situations and management plans. This cutting-edge tool incorporates a number of key indicators to provide the most accurate predictions of profitability. Some of the factors considered by the Revestor system include:
- Current and projected rental incomes and cashflows
- Expenses commonly incurred by landlords
- Home owners association fees, where applicable
- Projected property taxes
- Insurance premiums
- Property management fees
- Financing and acquisition costs
- Appreciation rates
- Rehab costs
- Return on investment
- Net profits
These essential elements can make or break a real estate investment strategy. By taking advantage of the information and predictive data available through the Revestor suite of tools, investors can ensure that they are making the right moves in the residential real estate marketplace.
Even with the highly advantageous conditions in play for investors, a fair amount of research and due diligence is still required to ensure the highest degree of profitability from each real estate holding. Tools like Revestor can deliver accurate information to help ensure that aspiring landlords can achieve higher profitability and enhanced revenue streams in the residential rental environment.