2014 Was a Good Year for Single-Family Rental Investors
Investors saw and took opportunities to grow their single-family rental portfolios in 2014 as the housing market continued to improve and provide growth potential. As we look forward to what 2015 holds, let’s take a moment to review the major news affecting SFR investors over the past year:
- Renter nation strengthens. Housing experts continue to publish data that supports long-term strength for residential rental properties. That’s good news for investors who want to buy and hold rental properties. Freddie Mac published some of the most recent data supporting the strength of the rental market, noting that more than 60 percent of the consumers it surveyed said they planned to rent long-term.
- Underwriting guidelines improve. B2R Finance adjusted loan terms to make financing one’s rental portfolio easier. Lending products from B2R have provided additional flexibility to investors who can consolidate mortgages and unlock equity. Changes include only 90 days of seasoning for a cash-out loan with up to 75% loan-to-value (LTV) financing.
- Affordable housing. About half the nation’s housing markets are still considered affordable by historical standards. That’s good news for investors who have watched housing prices increase at a pretty torrid pace over the past couple of years.
- High rental yields. Investors with an appetite for risk were able to pull in double-digit rental yields in 2014. RealtyTrac data showed investors could bring in a 19% average return in markets where unemployment and vacancy rates were higher than the national average. Investors also had the opportunity to scoop up low-priced homes in many of these markets, due to high foreclosure rates in some of the high-risk markets.
- Millennials drive rental demand. Millennials continued to express a preference toward renting over buying in 2014. That preference is driving demand in key metro markets such as Washington, D.C., New Orleans and San Francisco. Investors would do well to keep close tabs on metros favored by millennials as rental demand in those markets is expected to remain strong.
According to U. S. News & World Report, investor activity varies by investor, region and property types. “Auction.com, the largest online real estate marketplace, recently released survey data collected from investors bidding on properties across the country, which confirmed that buying property to hold and rent is currently favored over flipping nationwide. However, investor intent varies considerably between online and offline investors, regions, and property prices.”
B2R Finance is looking forward to providing continued financing opportunities in 2015 for residential real estate investors and to brokers who serve investors interested in growing their rental real estate portfolios.
The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.