Leave Psychological Bias at the Door – Rental Demand Continues To Move Higher

A couple weeks ago I finished rehabbing a condo I own and placed it on Zillow as a rental. I had it listed for about eight days. The only reason why I had it listed so long was that the property was about 35 miles away from where I lived, and that driving to it whenever I had a contact was impractical. With this said I am relieved it is off the market, as I had close to 60 inquiries and six applications scanned over. I went through the best one first, and it was leased and occupied two days later. The tenant makes close to 100k a year and has a stable government job. This house is in a nice working-class area of suburban Maryland, just outside the beltway.

While I continually come across the alt-media bubble talk concerning the rental markets, my experience and observation speaks otherwise.  The bubble predictions have yet to come to pass, and with the sharp rise in family formations (at least one million a year) supply is having a difficult time keeping up with demand.

Here is a link to an article from an industry publication titled, Research: Rental Demand to Escalate by the Millions.

-The primary catalysts behind the need are the as-ever delay in home-buying and the formation of new renter households as a result of aging and immigration. One million new renter households, on average, were formed each year over the last five.

-“Immigration affects rents and home prices far more than it affects the labor market,” said Alex Nowrasteh, immigration policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute, at the 2017 REALTORS® Legislative Meetings & Trade Expo in May. Nowrasteh pointed to increases in home values and rents that parallel population growth, much of it spurred by immigrants.

Over the past six years I chose to concentrate on building a rental portfolio, as capitalization rates and IRRs were exceptionally high. This sector offered the best returns.

Open borders may be causing havoc in the job markets; causing the wage base to fall, but in the rental markets it causes rents to rise.

Based on my experience of the last property I just rented out, this observation remains fully intact.

Stop listening to the gloom and doom of the alt-media rental bubble talk. Stop concentrating on specific markets like Silicon Valley and Manhattan. I have little competition as a landlord.