Families who recently lost their home to foreclosure are not catching a break when they hit the rental market. Tougher credit requirements and higher monthly rents await, both factors driven by a growing number of people in the rental pool. A Harvard University study revealed renter households increased by over 1 million last year, a jump four times the average for the years 2003-2006.
A typical couple on the receiving end of a foreclosure are in their 30’s, likely with a child or two. If they made the mistake of signing up for an adjustable rate mortgage, their monthly payment could have jumped by $900 or more, a level unsustainable by many. Fortunately, the worst case scenario hardly ever plays out but this wave of foreclosures has brought in to sharp focus the folly of those who bet on that philosophy.
And life is tough in Rentsville. It’s hard not to feel like a failure, like you’re taking a giant step backwards. These troubled families of foreclosures are running into the fact that only about one-third of rentals are single family homes and moving a young family back into an apartment after “owning” your own house is a real bite in the you-know-where. Plus the same Harvard study found that rental rates had increased by an average of $775 per month.
And the hits just keep on coming.
But imagine you’re the landlord. Times are fat indeed for you, my friend, as the trusty mechanism of supply and demand swings the pendulum in your favor. These times won’t last because nothing ever does but right here, right now, seems like an awfully good time for investing in income properties.
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