The New Rental Model

Morgan Stanley Research released its latest property report, “Housing 2.0: The New Rental Paradigm” to provide market revelations to financiers. It’s interesting to grasp the research team observes how more Americans became renters instead of householders, attributing to different factors in the economy.

The report states:

“Across the country, more USA citizens are becoming home renters, and fewer North Americans are becoming owners. The start of the rentership society is on us. But all renters are not equal “of the approximately 40MM rental housing units in the country (representing approximately $6 trillion in asset worth), about half are multi-family and half are single- family.”

And this is good news for investors in real estate like you! With such powerful demand coming from renters and cheap prices available on homes, there’s just about no way that you might miss out on the investment property market today.

Chris Mayer, managing editor of Agora Financial, supports these findings. He states, “…rental rates have been rising. In 12 of the 27 largest metropolitan markets in the U.S, it is less expensive to buy than to rent.”

“In some markets, the opening is pretty wide (e.g. Atlanta, where monthly rental rates average $840). A home loan payment? Principal, interest, taxes and insurance add up to a comparatively paltry $539. So there’s a excellent chance there for investors,” Mayer notes.

The Morgan Stanley report concludes that if you need to defy the current market malaise, it'd be more moneymaking to invest in single-family homes you can use as rentals. Such homes can counter the consequences of the housing bubble and further plunge in property values. More hence single-family rentals are also good for both equity and debt speculators according to the report.

Even though single-family property may cost a little more than some other kinds of properties, more real estate investors opt for having larger privacy in the properties that they invest in. Single-family property could also be expanded and many of them belong to communities with a house owner's organization.

Best of all, single-family houses allow a real estate investor to hedge better. When it is a buyer’s market, hires surge and one’s cash flow also increases. On the other hand, when it’s a seller’s market, the property’s price rises. This leaves the investor with the choice to sell the property for a (massive) profit or refinance the property to take some money and/or get a better mortgage interest rate.

With reports like this, it’s fairly obvious that one can gain an advantage with rental real estate.

Marco Santarelli is an investor, author, and creator of Norada Property Investments – a national real estate investment firm offering turnkey investment property in growth markets across the nation. He is also the original author of The New Rental Real Estate Paradigm.