Real Talk 4
June 2nd, 2008 by Emmanuel CervantesWith the disaster that has happened in the housing sector, it would be logical to assume that the multi family sector would benefit. There are a number of factors created by the housing slump which have contributed to an influx of renters.
- - buyers who are waiting for prices to come down
- - owners who have been foreclosed on
- - renters who’s landlords were foreclosed onÂ
- - those not able to afford to buy
- - tenants that were displaced from the condo-conversion crazeÂ
The National Association of Realtors has projected continued growth for occupancy and rental rates. Yet, we are hearing a lot of owners in prime areas express their concern of the rental market. Many owners have stated they are no longer able to be as aggressive with rents. Some have expressed that they have had to lower asking rent or offer incentives. Some factors affecting a rental slump:
- - sellers unable to obtain the price they want, renting their property
- - newly constructed condo developments converting to rentals
- - foreclosures on the market as rentals
- - unstable economy
- - inflation
Today’s investor is expecting the return to come from actual cash flow, rather than appreciation. With an unstable economy it’s no wonder why investors are not comfortable relying on pro forma market rents. What matters now is the actual income the property is achieving. Once again investment properties are just that…investment properties.