How are 2017 Rent Trends Shaping Buy and Hold Investing?

Across the nation in 2016, rent prices leveled off. This is good news for renters and for the housing market in general. New construction finally started catching up with demand, and more Millennials who had been avoiding the housing market started to buy. So what does this mean for buy and hold investing professionals?

While prices have leveled, they are still incredibly high. Landlords across the country are not complaining about the income they are bringing in these days. It still pays to invest in buy and hold real estate, because housing prices are still going up and rent prices are expected to remain high, though steady.

In some major metro areas, rents are actually falling, but this isn’t the case across the board. According to Apartment List, rents are down in cities like San Francisco and San Jose, but this is primarily due to new development at the luxury end of the market. Landlords of new luxury buildings are being forced to cut their prices and offer extra amenities to draw new tenants in. However, in the low and middle income housing brackets, rents are still going up due to a lack of supply. In this area, responsible investors can both make a solid return and provide much-needed quality, affordable housing to underserved communities.

In other cities, rents are still going up at incredible rates. In Tacoma, WA, for example, rents rose 7.7% in 2016. In Long Beach, CA, rents rose 6.1%. These cities are considered “secondary cities” – cities that are not far outside of major metropolitan areas (in these cases, Seattle and Los Angeles) and offer many of the same amenities and job opportunities, but at a lower cost of living. Secondary cities around the country saw much steeper rent increases than their primary counterparts in 2016, and that trend is expected to continue. Hot markets like these are ideal strongholds for buy and hold investors to explore.

As always, the investors who do best in any market are those who are financially prepared and ready to act quickly. At ZINC Financial, we offer buy and hold loans to both novice and experienced investors, giving you the leverage you need to succeed in any market.