In the headline of a real estate investing article we read: “Since 2009 Landlord income up a stunning 85 percent.” That’s a really big number, and it’s being reported by the U.S. Commerce Department. Since 2009, rental income grew the fastest compared to all other asset classes. In another article, we read that “Very few households actually own rental real estate.”
Both of these stories are providing statistics about the gains investors have enjoyed in rental property investment, and both clearly show that the “investor class” is the primary recipient. This is not the small individual investor; instead equity giants like Blackstone with 30,000+ rental home purchases during the period. This doesn’t mean that small investors aren’t sharing in the prosperity, only that they’re not getting nearly as big a share as the Wall Street players.
Soaring rents aren’t the main contributor to this statistic. It’s more that fewer landlords are controlling a much larger portion of the rental home inventory. While more than a million rental households have been added to the market, new home building is flat and inventories are low. Demand is growing and fewer players are controlling most of the rental property inventory.
A popular misconception is that it was mostly so-called McMansions that were the primary foreclosure targets during the crash. Actually, more than half of all homes that went into foreclosure between 2007 and 2012 were in the lowest price tier when they were purchased. Middle and lower income homeowners were the most damaged, as job growth became stagnant and many had purchased more home than they could afford.
These low priced foreclosures were going at fire sale prices, and small investors were in there grabbing what they could. However, even Fannie and Freddie were pitching package deals to the major players, so most of these low priced homes that were ideal for conversion to rentals went to the big investors like Blackstone. These homes are ideal for rental duty, as they were purchased at such low prices that positive cash flow was easy, even when they are on the lower end of the rental prices in many areas.
The thing for small investors to do is to continue thorough research and pick off value when they find it. You don’t need to buy a dozen to get a great investment deal.
In the headline of a real estate investing article we read: “Since 2009 Landlord income up a stunning 85 percent.” That’s a really big number, and it’s being reported by the U.S. Commerce Department. Since 2009, rental income grew the fastest compared to all other asset classes. In another article, we read that “Very few households actually own rental real estate.”
Both of these stories are providing statistics about the gains investors have enjoyed in rental property investment, and both clearly show that the “investor class” is the primary recipient. This is not the small individual investor; instead equity giants like Blackstone with 30,000+ rental home purchases during the period. This doesn’t mean that small investors aren’t sharing in the prosperity, only that they’re not getting nearly as big a share as the Wall Street players.
Soaring rents aren’t the main contributor to this statistic. It’s more that fewer landlords are controlling a much larger portion of the rental home inventory. While more than a million rental households have been added to the market, new home building is flat and inventories are low. Demand is growing and fewer players are controlling most of the rental property inventory.
A popular misconception is that it was mostly so-called McMansions that were the primary foreclosure targets during the crash. Actually, more than half of all homes that went into foreclosure between 2007 and 2012 were in the lowest price tier when they were purchased. Middle and lower income homeowners were the most damaged, as job growth became stagnant and many had purchased more home than they could afford.
These low priced foreclosures were going at fire sale prices, and small investors were in there grabbing what they could. However, even Fannie and Freddie were pitching package deals to the major players, so most of these low priced homes that were ideal for conversion to rentals went to the big investors like Blackstone. These homes are ideal for rental duty, as they were purchased at such low prices that positive cash flow was easy, even when they are on the lower end of the rental prices in many areas.
The thing for small investors to do is to continue thorough research and pick off value when they find it. You don’t need to buy a dozen to get a great investment deal.