How is the single family rental market looking for real estate investors in 2019? Continue reading to find out.
Single family homes are a great investment for any real estate investor, but this is especially true for beginners. Could they possibly be the best real estate investment for 2019?
A Few Facts to Get Us Started
Single family rentals make up more than one-third of all rental properties in the US housing market. There are currently around 16 million, and it’s expected that another 13 million homes will hit the market by the year 2030. With this much inventory, the single family rental market is looking promising for the future.
Demand for single family homes reached an all-time high in 2018 and is expected to continue as so for the coming years. You’ve probably heard and read a lot about why investing in single family homes is a great move, but we’re here to tell you exactly what to expect for the single family rental market in 2019.
Single Family Rental Market Trends 2019
Taking a look at the PwC Emerging Trends Report for the US housing market 2019 might leave new investors with hints of uncertainty. This is something that many first-time real estate investors should get used to. The housing market is ever-changing and, at times, unpredictable- that’s just the way it is. Successful real estate investors learn to prepare and manage their investments in accordance with any shifts in market trends.
However, there were a couple of broad emerging trends expected to shape the real estate industry for next year. There’s also a couple of things to look forward to for the 2019 single family rental market.
18 Hour Cities: Millenials Moving to the Suburbs
The annual Emerging Trends Report has previously identified the success of 18-hour cities in developing urban areas that have led to economic growth. However, urban revitalization of smaller U.S. cities seems to be a great bet for higher demand from young adults. According to the Emerging Trends survey, it seems that now, at least some of the 80 million-plus millennials could be turning their attention to the suburbs. Researchers are seeing more evidence that the younger generation that put off buying a home has its eyes on single family homes, meaning that housing in these so-called 18-hour cities will be in high demand.
Learn More: Buying an Investment Property in the City vs Suburbs in 2019
The U.S. Census Bureau reports that over 2.6 million people a year moved from principal cities within metropolitan areas to the suburbs in 2016 and 2017. It’s also important to mention that it isn’t just the suburbs around gateway cities that are seeing this migration; 18-hour cities also are seeing the benefits. The 18-hour markets that made the top 20 in this year’s survey saw an average of 55% of their new residents settle down in the suburbs over the last five years. Based on this information, we’d definitely recommend beginner real estate investors to start looking at single family rental markets in the suburbs.
Technology has recently moved from compiling “big data” to
finding better ways to make decisions using the data. Tech is expected to offer more opportunity and enhance competition and efficiency. This will be a huge game changer for all types of property in the real estate market for 2019.
Stay ahead of the competition by using digital tools to help you out with your investment decisions in the single family rental market 2019. If you want to get access to predictive analytics on everything from the neighborhood level to a thorough analysis on the property level, check out Mashvisor. Start your 14-day free trial now.
Related: Disruptive Technology- The Future of the Real Estate Industry
Affordability & the Single Family Rental Market
So, let’s get one thing straight. The statistics are clear: the US is currently facing a widespread housing crisis, from big cities to small towns. The National Association of Realtors (NAR) says the combination of rising prices for single family homes and rising mortgage rates have led to a decrease in home affordability by 15%. However, the survey (along with other resources) provided a regionally based look at markets, giving us a better idea of the single family home affordability in each region.
- South: Central West – One of the main factors behind the success of markets in this region is single family housing affordability.
- West: Mountain Region – According to an article from Forbes, returns in this region tend to be higher whereas home prices are typically lower.
- West: Pacific – Tacoma is the only single family rental market in the region where the average household income can cover the cost of buying a single family home. Sacramento, Portland, Inland Empire, and Seattle are the next most affordable markets based on home prices.
- Midwest: East – Investors who are really on the hunt for affordable and profitable investment properties should check out this region. Cleveland and Detroit seem to be some of the most affordable single family rental markets in the country.
- Midwest: West – Higher incomes combined with lower living costs, and perceived high quality of life lead to many strong markets in this region. But, single family home affordability is among the best in Des Moines and Omaha.
How to Enter the Single Family Rental Market
So now you have a better idea of how the single family rental market is going to look like in 2019. Are you wondering how to actually get starting in investing in long term rentals? Here’s a quick guide.
Finding the Right Property, Anywhere
Investing in real estate doesn’t limit you to your local real estate market. If your local single family rental market isn’t looking too hot right now, that shouldn’t stop you from investing. The internet is an amazing tool all on its own; you can find out exactly where the hottest single family rental markets are. It’s important to determine your investing criteria as well. So are you looking for low-risk investments? High returns? Low vacancy rates? You can use Mashvisor’s heatmap analysis tool (shown below) to find neighborhoods ranking high in the most important criteria- listing price, rental income, and cash on cash return.
Financing Investment Property
Because mortgage rates are on the rise, you’ll have to be sure you have a secure financial plan for your single family investment property. Shop around with different mortgage lenders and consider working with a mortgage broker to find the best mortgage for your budget.
Managing Your Property
Successfully managing your property can make all the difference. If you’re also planning on being a landlord for this investment property (which is typically the case), you’ll need to be managing the property and managing tenants. It depends on the size of your single family home investment and its location, but it usually makes sense to self-manage. However, if you’re planning on investing in multiple properties, professional management might be better.
Take Advantage of Mashvisor’s Tools
You don’t need to make all the difficult decisions on your own. Mashvisor’s tools have helped thousands of investors make the best real estate investments. To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
Related: 5 Real Estate Tools for Investing in Single-Family Homes for Sale