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We have a town home that is a newer build (05) and it is currently being rented. We own it free and clear so it is a positive income. Where do the professional realtors see the rental market heading in the next year? Thanks
We have a town home that is a newer build (05) and it is currently being rented. We own it free and clear so it is a positive income. Where do the professional realtors see the rental market heading in the next year? Thanks
This is going to be short and sweet because I am running out the door....but generally speaking (and this is a HUGE generality) when home values go down it is because interest rates have gone up which generally means rental rates go up because less people can afford to own a home (the cost of money has gone up).
I'd keep it provided it is not a drain on the pocket.
I have a couple more minutes so I will elaborate a little more....it really comes down to simple economics.....
Ok so when interest rates go up, the demand for mortgages go down because less people can afford them which means less home sales.
Less home sales means less of a demand for homes which means prices go down.
While the demand for homes goes down, a good portion of these people who can no longer afford a mortgage will still need to move for whatever circumstance....therefore creating more of a demand for rentals. Higher rental demand means rental rates will end up going up.
This would be the normal scenario....when markets are not left to their own devices (ie rent control) the whole scenario changes because the market can no longer react the way it would normally react due to outside influences.
I hope this sheds a little bit more light on everything for you. Best of luck and please everyone chime in if you find what I say differently.
I would hang on to your good tenant as well, with positive income flow. However, in our market, I have been talking to our rental department, and we are starting to get flooded with rentals, and not the folks to rent them. Those that can't sell are putting their homes up for sale. I don't know why athe market is starting to get saturated, common sense would say that there are also folks not buying who are choosing to rent, but right now it is very weird.
This is going to be short and sweet because I am running out the door....but generally speaking (and this is a HUGE generality) when home values go down it is because interest rates have gone up which generally means rental rates go up because less people can afford to own a home (the cost of money has gone up).
I'd keep it provided it is not a drain on the pocket.
Hope this helps.
~Joe
Joe..we are out here in dutchess, arlington school district. Bought our raised ranch in 98...for peanuts (you can imagine it, I am sure..when interest rates were in the 8's). We were both in our mid 20's, no kids and this home was built in 93..and the original owner raised the ceilings downstairs, tiled it and really made it beautiful.....and the plus again, was that the downstairs was finished...its a shame for her, but a gain for us..because right after she upgraded up the wazoo for it, she got divorced..so this home turned out to be part of divorce settlement..so we lucked out.
Anyway, we refied it 5 years ago at 4.75% FIXED for 15 years. The home will now be paid off in 10 years..maybe more because of extra payments.
We are hoping to use this home for college money for the kids..or at least a portion of it.
Here is the thing..I wanted to cash in 2 years ago.but my dh, a native New Yorker grew up in the bronx..with the two family attitude on always having rentals and such. Now its a shame, because of the soft market..we wont get the premium price, but because we bought it so long ago....we will never LOSE money...
Now, I am thinking that perhaps renting it out next year...(have to move as now we have 2 kids, one on the way..and we need to upgrade to development and more of a cookie cutter home...Monroe is on our list actually).....
Is it still worth renting out a home....what do you think, at this point, since we missed the boat so to speak on selling...is it worth renting.
if you can afford to purchase without selling this home, and it is in a good rental area, that you can keep an eye on, why not? Keep it for awhile, see if the market turns, then sell it. Do a 1031 tax exchange, and purchase another rental or two, or a vacation / retirement home and build your wealth. Or use it for the college education, but unless the tax laws change, you will want to sell it within 2 years after moving out to claim the tax exemption, up to $500k couple or $250k single.
We can afford to keep the house, and qualify at the same time...so that isnt the issue..I am just scared of taking on responsibility of being a landlord so to speak...the home has tripled in value..which is great..and recently was assessed for over 500k. The bus stop is three houses down and the library, elementry and middle school are brand new (2004)..and the high schools principal won NY State principal of the year..its the best district where we live, based on test scores.
The type of people we will get are people like us..only 8 years younger...you know..newlymarried ,or a nice family with young kids..because really the draw is to move here because of the schools ,and to take advantage of it..
I just wasnt sure what the rental market looks like..and if its worth it or not.
Historically when the resale market is a buyers market, rentals are hot properties and you generally see rents increase. With home pricing staying stagnent in many areas and with higher intrest rates renters are choosing to stay put vs. taking the step towards home ownership. You're in a great position to keep it as an investment.
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