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Thursday, 26 May 2016 05:00

2016 Real Estate Trends, Investment Properties, and investment property loans

2016 Real Estate Trends: Urban vs. Suburban Investment Properties

What current investment property loan, development, and media trends are impacting urban and suburban real estate? Where are the opportunities? How can investors take advantage of them?

2016 Real Estate Trends

There are a number of significant trends influencing the direction of the market, and where the profits are this year.

These include:

  • Low investment property mortgage rates
  • Affordability
  • Local city planning and appetite for revenues
  • Developer profits
  • Millennial buying power and preferred property features

There is no question that local authorities and real estate developers have made a strong effort to promote urban living. Urban redevelopment and density has proven to both produce high profit margins for developers and to enhance profitability for local government.

However, these efforts continue to be rebutted by surveys and data which shows that homebuyers, and millennials in particular are favoring the suburbs and the property features they are finding in more suburban locations.

What End Buyers Want

Homebuyers continue to show they are preferring properties that offer:

  • Affordability
  • Views
  • Outdoor space
  • More space

Renters may be in a slightly different boat, and may have fewer choices about where they get to live. However, they are still looking for affordability and views. If they must choose smaller urban spaces, then community experience and convenience can often be a significant differentiator in their preferences.

Rental properties continue to trend and be in demand as many millennials continue to hold off on purchasing a home, lending for end retail buyers remains much more limited than access to multifamily mortgage loans and single family rental property loans for investors.

Primary, Secondary & Tertiary Markets

Surveys of global property investors and media reports from major publications like Forbes continue to suggest that many are drawn to America’s most famous metro areas. However, CCIM and other industry publications have noted that experienced domestic and international investors have been increasingly pursuing investment opportunities in secondary and tertiary markets for several years. Conservative funds and wealthy individuals are not allowing low cap rates to deter them from hot cities like New York and San Francisco. Yet, many need the yields and growth potential that can only be found in small cities and more suburban markets.

Fortunately inventory is still plentiful in most markets and sectors if investors have the right connections and channels to source real estate deals in higher volumes.

Investment Strategies for 2016

Given the above, and the current investment property mortgage lending landscape diversification appears to remain the name of the game for 2016.

The most sophisticated individuals and firms continue to both buy and sell real estate in 2016. Yet, keeping the disparity of the above factors in mind many are increasingly investing both locally and out of state, and across suburban and urban markets in both primary and secondary areas.

Note that while both multifamily mortgage loans and single family rental property loans are very available, lenders do have clear preferences on locations and property types, and are adjusting pricing on their perceived exposure to risk. This continue to make properties closer to the core and both performing multifamily and single family loans on quality properties the most desirable.

To facilitate borrowing by investors investment property loan lenders are continuing to roll out more options for multifamily investment properties, blanket mortgages and lines of credit for portfolios of single family homes, and mixed use projects, as well stated income loans and loans for foreign nationals.

Get a quote to refinance investment property, or for a blanket mortgage to expand your portfolio from Rental Home Financing today…

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