3 Tips on Becoming a Landlord in Today’s Ideal Rental Climate
Homeownership — it’s an essential ingredient in achieving the American Dream.
Baby boomers know this. And the generation after them largely does too.
But millennials for some reason don’t seem all that interested in home ownership…
In fact, today a whopping 74% of millennials are opting to rent rather than buy a house.
And out of the entire renting population, a record 82% of renters think that renting is more affordable than owning a home — that’s up from 67% just one year ago.1
Millennials are getting stuck in the renting cycle, continually deferring their American Dream for another day.
It’s a unique predicament… but it gives you the opportunity for a steady stream of income for years to come.
And we’re entering into the perfect time for you to tap into this market…
Becoming Millennials’ Landlord
The idea of being a landlord has plenty of negativity attached to it, and it’s certainly not for everyone.
But there’s no denying — it’s a great source of income! And you couldn’t ask for a better scenario to start owning rental property…
We expected millennials to fuel the home-buying market, but it’s not playing out how we anticipated.
More than ever, those in their 20s and even 30s are saddled with crippling student debt, unwilling to take on any more loans.
For some, it takes the better part of a decade to completely pay off their college loans, which makes renting a much more attractive prospect.
And it’s heating up the rental market big time.
This summer, apartment demand surged 11% from a year prior. And average rent costs are up to $1,390 per month, just shy of record highs.2
While tenants might not be catching on, it’s a great time to be a landlord… and it’s about to get even better for first-time landlords.
The Best Time of the Year to Buy a House
Typically, the housing market from spring to summer is bustling. There are plenty of people trying to move, which gives sellers the upper hand and pits buyers against each other.
But as the winter months inch closer, buyers become more scarce — motivating sellers to cut prices before the market goes cold.
Meaning right now, in early fall when sellers are beginning to worry, is the best time for you to look into owning property to rent out.
Not to mention, with mortgage rates continuing to fall, you’ve got a better chance at locking in a good deal.
If you’re considering tapping into the rental market, here are three tips to smooth the transition:
Start Small — If you’re new to the market, you won’t know yet if the business really suits you or your lifestyle. Don’t get distracted by huge apartment rental enterprises with multiple tenants. Single-family homes are a fine place to try out being a landlord.
Understand Your Location — Don’t attempt to go into areas you don’t know well. The perfect place to start your rental journey is in a location you understand and are familiar with.
That way, you’ll know the most desirable neighborhoods in the area for your target demo, without having to rely on a realtor or website’s personal opinions.
Know If You Want to Be Hands-On or Hands-Off — Many people think that being a landlord has to be hands-on work… and that’s simply not true. But before going into this market, know yourself and the work you want to put into a property.
If you aren’t willing to go out and fix a leaky faucet or collect late rent checks in person, consider hiring a property-management company to help you with these day-to-day activities. Keep in mind however, this will cut into your profits.
This is an income stream just waiting for you to take advantage of… but this perfect storm won’t last forever.
As long as you keep these three tips in mind, you could be well on your way to collecting reliable payments very soon!
5 Must Knows for Monday, October 7th
GE to Freeze Pensions — General Electric announced a plan to freeze pension payments to about 20,000 workers and offer pension buyouts to another 100,000 former employees. The move is effective January 1st, 2021, and is expected to cut the company’s pension deficit by up to $8 billion and its net debt by up to $6 billion.
High Level Trade Talks Begin — On Thursday, watch out for any insights into the high level trade talks taking place between U.S. and China negotiators in Washington. As has been the trend recently, expect stocks to pop on any positive news and fall on no deal rumors. The next round of U.S. tariffs on Chinese goods are set to go into effect on December 15th.
Light Earnings Action This Week — There’s only a few companies reporting earnings this week before the action really heats up next week. On Tuesday, look for reports from Domino’s Pizza and Levi’s. On Thursday, look for Delta Airlines’ report. And on Friday, look for reports from Fastenal and Infosys.
Jerome Powell Speaks — Other than the trade war negotiations, predicting the Fed’s actions with interest rates is the other most important storyline that investors will be trying to figure out this week. On Tuesday and Wednesday, look for clips from Fed Chairman Jerome Powell’s speeches in Denver and Kansas City. Any hints about future rate cuts should send the stock market higher.
Consumer Sentiment Out Friday — Remember, two-thirds of the U.S. economy is tied directly to the consumer. And right now, with the lowest unemployment rate in 50 years, consumers have proven to be very confident in their ability to earn a livable wage, and spend those wages at some of our favorite publicly traded companies. For the most up-to-date reading on the state of today’s consumer, look for the University of Michigan’s consumer-sentiment survey to be released on Friday.
Here’s to growing and protecting your wealth!