I can tell you as an active fund manager in the nationwide preservation of affordable housing, the competition to acquire buildings most difficult to match is in the form of either investors who project spending little (if any) in capital improvements (to maximize cash flow) or those who plan to displace these affordable residents by petitioning to remove the rental restrictions and bring the apartment community back to
market rental rate returns.
Not exact matches
With both mortgage interest
rates and real estate prices at historic lows, many investors feel there is more opportunity for higher
returns in
rental properties vs. mutual funds and the stock
market.
Filed under
Marketing, buyers, comps, MLS listings, Real Estate Investing,
Rental Property, rental rates, return on investments, wholesale pro
Rental Property,
rental rates, return on investments, wholesale pro
rental rates,
return on investments, wholesale property.
Apartments, lofts, condominium and residential mixed - use developments are the biggest investor plays due to high demand, low vacancy (3.8 percent), elevated
rental rates, and the
return of a strong condo
market.
RealtyTrac analyzed ZIP codes across the country to identify «hyper - local hipster»
markets that offer investors solid
returns on
rental properties and boast low vacancy
rates.
The high price / low cap
rate environment is also pushing investors to look for bigger
returns in new development deals, value - add acquisitions and properties in secondary
markets, such as Raleigh, N.C., Charleston, S.C. and Tampa, Fla. «What we really see is value - add picking up, because with minimal capital you can get a property up and going and get a little bit higher
rental rate and a better ROI than you can by putting a shovel in the ground and waiting 19 to 36 months to see it come to fruition,» says Ressler.
That new supply can dampen
rental rate increases, and when factoring in the high cost of entry in gateway
markets,
returns are more quickly impacted when rent growth stagnates.
«In the high - risk, high - yield
markets, where unemployment and vacancy
rates are higher than national averages, the average
return was a whopping 19 percent, actually up from a year ago thanks to a strong increase in
rental rates,» Blomquist continued.
Competent forecasting firms specialized in property
market analysis and forecasting do provide forecasts of major office
markets in the US, which can provide valuable insights into future office
rental rate movements and potential
returns from office property investments.
There are a number of other factors besides interest
rates that are affecting cap
rates, including the strength of the
market, potential
rental growth and
returns on alternative investments.
Because high
rates make homes less affordable, the
rental market improves, giving real estate investors a chance to improve cash flow and increase their
return on investment.
«Not surprisingly, some of the highest vacancy
rates are in
markets with the highest potential
rental returns such as Chicago, Detroit, Indianapolis, St, Louis and Baltimore,» says Blomquist.
Specifically, we looked at home vacancy, capitalization, home value appreciation and job growth
rates, changes in
rental prices, and the average number of days properties have been on the
market to determine which U.S. metros will give investors the highest
returns on
rental investments.