You may not have thought about it from this angle before but let’s pretend you have made your dream of becoming a real estate investor reality and are now the proud owner of an income property. This means you need a tenant for cash flow to cover the monthly mortgage payment.
Do you realize that in a high interest rate economic climate you can actually charge more in rent? It’s true and obvious when you analyze why. As an owner of rental property, you love ever climbing rates for one big, fat reason – it’s harder for people to qualify for loans to buy a house. If they can’t buy a house, they’re going to become renters because, as Jason says, “Everyone needs a place to live.” It’s a basic human need that makes all this real estate investing stuff work in the first place.
On thing to keep in mind right now is that the government bailout scheme and the “no foreclosure” mentality is keeping the rental market artificially suppressed at present. The Feds are obsessed with propping up damaged financial institutions and bribing them into modifying loans for people who might otherwise be foreclosed upon and forced into the rental market.
We’re not here to tout the praises or condemn the process. Facts are simply facts and, as a landlord or potential landlord, you need to become something of a forecaster of the rental market in order to keep on walking down that road to financial independence through timely rent adjustment. It helps if you understand the forces that move your market.
