Real Estate Blog - Great news about the housing market!

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Great news about the housing market!

For all of those who are scared about dropping values and increased foreclosures, there is one aspect of the real estate market that will soar, and that is the RENTAL MARKET. The basics of supply and demand state that when there are fewer homes available to rent, and many people will not buy, rentals are going to be a hot ticket for the next couple years. To all those investor clients that catch themselves in a short sale situation, it would not be such a bad idea to try to hold on to that property for a little longer.

I have noticed in the last three months in Los Angeles, there are a shortage of rental properties, and many times there are multiple offers. It reminds me of red hot real estate market towards buying, but now it has changed to a rental market.

Posted by Hayden Gerson on 12/21/2007 07:35 PM

Comments (5)

rentals, foreclosures, good news

5 Comments on Great news about the housing market!

DEC

2007

Good news ideed. It's not a secret people will have to live somewheres.

I have thought about that as well. There are a number of good looking rental properties in Austin.

Hey, l just filed a dba for a property management division. I realized that when I put a for rent sign on my listings that the phone that never rang while the property was listed was exploding when the people saw the for rent sign!!!!

DEC

2007

Hayden, I agree rentals are the palce to be right now. What methods of analysis would you use to determine if a property is worth investing in?

JAN

2008

Net operating income (NOI) after debt service and expenses should always be used for rental properties of 5 or more units. Unfortunately, in LA, no many properties cash flow and many are bought for the appreciation anyway. They will likely not be good investments for a few years. NOI divided by the value or your purchase price equals the cap rate. In most parts of the country, a cap rate of 10% would be considered in the normal range for rentals. In California, it is closer to 5%. In a down market like this, you would be wise to be sure your property cash flows so that you can ride out any price declines without having to fund the property every month.

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