It is the best of times and the worst of times, depending upon your point of view. While 53% of renters are paying more than 30% of their income for housing, a level that the government defines as “unaffordable,” rental investor conditions continue to look absolutely rosy. Unfortunately, stricter lending standards have created something of a Mexican stand-off when it comes to home ownership – banks are leery about getting burned yet again from the continuing fallout of the foreclosure quagmire. Though house prices are at historically low prices in some areas, displaced, unemployed American families are either afraid to buy or can’t meet the lending industry’s stricter new standards.
“The problem is that everyone has to live somewhere,” says rental investor expert and host of The Creating Wealth podcast, Jason Hartman, “even if you can’t buy it.” Faced with the option of paying a premium for suddenly in-demand rental housing units, more families find themselves in the unhappy position of coughing up 30% or more of their income just to meet housing costs, which puts an even greater strain on other areas of the personal budget.
Hartman refers to housing as a “universal demand,” meaning that – like food, water, and clothing – it is considered essential, and in some cases, necessary for survival. The bottom line is that we pay whatever we must for a roof over our heads. The problem, according to an article posted at AZCentral.com, is one of dwindling income. Even though median rental rates remained stable last year at $855 per month, median household income fell 2.2%, which was enough to push more than half of all renters past the tipping point of housing affordability.
No one likes it when fellow Americans are hurting financially, but that shouldn’t keep us from looking at the other side of the coin – investment opportunity. Creating wealth is not a zero sum game and it doesn’t automatically follow that a certain number of rental property investors must profit in proportion to the amount of housing misery suffered by renters, but call it what you will, investing in residential rental properties right now is quite likely the hottest sector going right now, primarily due to the continued price weakness in many areas of the country.
“If ever there was a perfect storm for income property investment, this is it,” Hartman says. “I can’t imagine conditions lining up any better than they are now.” For those with a little bit of cash to put down, real estate investments can be had for as little as $5,000 down and are looking better than stocks, gold, and currency all wrapped together. Many people are focused on gold as the “hot” investment, but neglect to consider the fact that it is one dimensional and only profits from price appreciation which, to be fair, there has been a lot of lately. Hartman likes to point out that rental properties offer a variety of ways to profit, one of which certainly is price appreciation, but the profit potential goes so far beyond that.
As founder of The Complete Solution for Real Estate Investors, and host of The Creating Wealth Show podcast, Jason Hartman advocates the belief that financial independence is available for everyone through the purchase of income property in prudent markets nationwide. Hartman provides embattled stock market investors with education, research, resources and technology to deal with all areas of their income property investment needs.
The Creating Wealth Show Team
