If you're thinking about investing in a rental property, experts say low home prices combined with low interest rates make this the best time in years to become a real-estate investor.The U.S. homeownership rate has fallen to its lowest point since 1995 as more renters put off or forgo the decision to buy a home.
What's more, the real-estate market is starting to recover: U.S. houses lost $489 billion in value during the first 11 months of 2009, but that was significantly lower than the $3.6 trillion lost during 2008, according to real-estate website Zillow.com. This time, though, a different kind of buyer has been powering the housing recovery: investors looking for valuable rental property.
Investor incentives
Institutional investors have typically focused their capital on commercial properties and
multifamily apartment buildings. However, the strategy of converting homes into rental
properties benefits investors in several ways.Construction, retail and service industries benefit
Construction industries are benefiting from investors’ need to improve the curbside appeal of
properties and make them ready for renting to families. The remodeling industry has been
one of the first to profit. Remodeling contractors typically derive most of their revenue from
wealthier households looking to alter or upgrade their homes; however, with the glut of
unoccupied or foreclosed homes that investors are planning to fill with renters, remodelers
are finding more opportunities for smaller projects like new appliance installation, kitchen
renovations or bathroom upgrades.
With unemployment steadily falling, disposable income growing moderately for the
next five years and rising pent-up demand for homeownership among consumers currently
forced to rent, a second wave of homes on the market could receive a warm welcome.
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