Thursday, 05 October 2017 00:00

Rental Property Growth Rates - Ramp Up Your Rental Portfolio

Rental property growth rate data shows it may be a great time to both restructure and ramp up investment portfolios. Here are the stats, quirks, and opportunities rental property investors should be watching now…

The Rental Property Market Correction

Rental rates began slowing in 2016 according to CoreLogic. They experienced a massive surge in the wake of 2008, and marched upward at an amazing pace for several years back to back. Then credit slowly began to become more accessible to home buyers, while new multifamily construction took off. That construction and completions is believed to have peaked in 2017. Some softness may be patched up by tight inventory, a stronger national economy, and the absorption of new apartment units. Analysts believe that overall, the US should see continued modest gains in rental property growth rates, though trends will be localized.

Declining Rental Markets

Renters have been finding more deals over the last six months. According to various data compilers rents have been floating down in some previously hot markets.

The 2017 National Apartment List Report shows the fastest rental rate declines in:

  • Houston, TX
  • Anchorage, AK
  • Washington, DC

While national rent averages are up, there have been declines in cities from coast to coast. Some of the most notable include the following.

  • San Francisco, CA
  • Manhattan, NY
  • Sunnyvale, CA
  • Oakland, CA
  • Cambridge, MA
  • El Paso, TX

Best Cities for Rental Property Growth

At least when it comes to multifamily property, Freddie Mac poses that some notable markets should see rents bounce back in 2017, with income growth rates between 4.2% to 6.4%.

    This includes:
  • Sacramento, CA
  • Seattle, WA
  • Portland, OR
  • Phoenix, AZ
  • Tampa, FL
  • Chicago, IL
  • Jacksonville, FL
  • Los Angeles, CA

Business Insider’s list of best places to invest in rental property this year for rental growth include; Detroit, Dallas, Orlando, and Atlanta.

The World Property Journal and ATTOM Data recommend this list for fast rental growth rates in 2017.

The Quirks & Pivots

It is also important to watch other factors which may alter the organic rates of growth we would otherwise see.

    This year it includes:
  • Record setting hurricane damage
  • The massive Equifax data hack
  • Interest rates
  • Summary

The above data suggests that this is both a great time to get in and scale rental property portfolios. Investors should still monitor trends and local market fundamentals to evaluate where the best rental rate growth can be expected. Another major driver this year, is continued low interest rates (for now), and the availability of rental home financing. There are some uncertainties, but what most are sure of is that it is hard to beat the current environment for making new acquisitions, if you know where to find good deals.

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