Orlando Rentals Pay off for Investors – In many towns across the country, single-family rentals are proving to be solid investments.
A recent report from bond-ratings agency Morningstar notes that “Performance of all single-family rental transactions has met or outperformed Morningstar’s original forecast.”
Families that might prefer to buy their own homes often still cannot secure mortgage loans and are renting single-family houses to live in instead. That is helping the owners of single-family rentals find new residents –and increase their rents.
Property managers of single-family Orlando Rentals raised their average rents by 3.5 percent in 2015 across the 504 counties that data firm RealtyTrac looked at nationwide. (RealtyTrac looked at three-bedroom units for the study, which are likely to represent rental houses). That rent increase is significantly higher compared to the rate of inflation over the same period.
Thanks to high demand, relatively few single-family rental houses remain vacant. The vacancy rate for rental home portfolios included in bond transactions rated by Morningstar currently ranges from 3.3 percent to 7.2 percent. Morningstar has rated bonds backed by the loans on 91,000 single-family rental properties in 23 separate, single-borrower bond issuances. In three-quarters of these 23 transactions, the percentage of vacant rental houses was less than 5.0 percent.
“Vacancy levels are well within expectations, and rents have exceeded originally underwritten rents,” Morningstar researchers write.
Would-be homeowners fill rental houses
“The increase in demand seems to be driven in part by people who want to live in houses, but cannot get a mortgage, either because they do not have enough cash for a down payment or they have damaged credit,” says Brian Grow, managing director of RMBS at Morningstar Credit Ratings.
These families often include school-age children. Many have strong preferences for specific school districts. The percentage of people aged 45 to 64 years old who own their own home declined in the third quarter of 2015, according to the U.S. Census Bureau.
“They are more likely to have formerly been in a home and like living in a home as opposed to an apartment,” says Daren Blomquist, vice president for RealtyTrac. “But they are also more likely to not qualify to buy a home because of a foreclosure or short sale during the crisis.”
Local realtors expect demand to stay high for single-family rentals, according to Morningstar, which interviews realtors in multiple markets on an annual basis to gauge their opinion of the rental and housing market conditions.
“All of the Realtors felt that the rental demand would continue to be strong in all regions,” says Grow. “It looks like demand will continue to be strong in the near term.”
Property managers have generally spent more on expenses to maintain their single-family rental properties than predicted in the original underwriting.
“Across the board, capital expenditures have been higher than Morningstar’s original forecasts, and often more than double issuer-underwritten capital expenditures,” the firm’s report points out. However, the increased income from rising rents has made up for the rising cost of fixing up these properties.
Source: Floridarealtors.org
If you are interested learning more about Orlando Rentals and are considering purchasing an investment home or if you currently have a secondary home that you are considering renting out we can help. We have a full service experienced property management team dedicated to our owners. Contact us to get more information on our property management services.
Orlando Renters It’s Time to Buy a Home – Homebuyers are expected to outnumber home sellers this spring, which will likely drive up asking prices, says Lawrence Yun, chief economist for the National Association of Realtors® (NAR).
“Given that prices are rising, more people will be pushed on the borderline of conventional mortgage limits and may need a large downpayment or a jumbo mortgage,” Yun told The Wall Street Journal.
Nationwide, the median price for an existing single-family home in January was $213,800 – up 8.2 percent from a year ago, according to NAR’s housing data. Home prices are moving at the highest rate since April 2015.
“There’s a decade of pent-up demand,” says Bob Walters, chief economist of Quicken Loans.
One piece of good news for homebuyers this spring: Mortgage rates are expected to stay low, with the 30-year fixed-rate mortgage not likely to rise above 4 percent before May, says Keith Gumbinger, vice president of HSH.com, though the long-term outlook for mortgage rates is less certain.
As such, lenders predict that the spring season will be a busy one.
To avoid closing delays, buyers need to get into the market sooner rather than later, says Paul Anastos, president of Mortgage Master in Walpole, Mass., a division of loanDepot. Like a traffic jam, “every minute later you leave costs you 10 minutes,” he notes. “Every day, the audience looking for houses increases exponentially.”
Anastos also urges homebuyers to get preapproved for a loan prior to home shopping – a step above pre-qualification. He says that alone could save home shoppers up to 10 days in the closing period. And “If you find a home this weekend, you look highly competitive.”
Orlando among top metros for rental housing growth
Orlando among top metros – Online real estate investment management firm HomeUnion has identified the 10 metros with the strongest investment home rental growth in the U.S., and Orlando is on the list.
To rank the metros, HomeUnion looked at 44 single-family rental housing markets nationwide. San Jose, Calif., topped the list and Orlando came in at No. 2.
“It’s no surprise that San Jose leads the U.S. with anticipated rental growth of 7.3 percent, due to healthy job growth and increasingly out-of-reach prices for traditional housing,” said Steve Hovland, manager of research services for HomeUnion. “Orlando’s ranking of No. 2 on our list seems more noteworthy, but not surprising given the furious pace of economic growth in the area over the past two years. Tourism has fueled the region’s booming economy: Orlando has welcomed more than 60 million visitors, as well as job seekers, annually.”
Here are the top 10 metros, their forecast year-end 2016 rents and 2016 rent growth forecast:
Back From left: Broker Associate Kevin Anderson; Broker Associate Jim Merganthaler; Agent Mona Sutphin-O’Niell; Managing Broker/President/Owner Steve Silcock; Office Manager/P.A. to Steve Silcock Hannah Garrity; Sales Administrator Bobby Gonzalez; Senior Property Manager Tim Hack
Front From Left: Broker Associate Cheryl Laymon; Founder Betsy Bardell; Co-Owner/Agent Anne Silcock; Admin Marjorie Silcock (Not listed above: Agent Audrey Bahrman; Broker Associate Michael Anker)
The Osceola Chamber of Commerce awards Bardell Real Estate with the 2015 “Small Business of the Year”
It has been a pleasure to work for this family owned and operated company for the last 2 years. With just 10 closely knit employees, an extended family is what Bardell Real Estate has grown to be. That camaraderie, coupled with the eagerness to help each other pours over to our customers and our community. Our customers range from international investors and snow birds flocking down to escape the cold winters of the north to residential home buyers seeking the home of their dreams and long term rental property management.
A great majority of our business comes from repeat customers and referrals. We all here at Bardell Real Estate would like to thank all of you for this award. Our relationships with our customers and clients have developed into friendships. We are honored that you have allowed us the opportunity to assist you in all of your real estate needs.
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