Naples Rental Market, Homes in Demand
Naples Rental Market, Homes in Demand
What is holding you back from purchasing your new vacation home or investment property in the Naples area?
Prices are low. Interest rates are low. Inventory is low.
Are you unable to use the vacation home on a regular basis? Are you still a few years away from retirement? Are you putting kids through college or taking care of family members?
The Naples rental market may be the solution you are looking for.
Purchasing a property in the Naples area at a discounted price can be a lucrative investment. High demand for rental homes and increasing rental rates can offset expenses and provide a good rate of return over time. Buying your vacation home now rather than later can save you money in the long run.
Rental Homes Are in Demand
The face of the housing market is changing. Previous home owners impacted by the foreclosure crisis are now renting the very homes they owned. It’s estimated there are at least 1.75 million current renters in the U.S and those numbers are expected to rise over the next five years.
Rental Homes Are A Money Making Strategy
Investment firms and private equity partnerships are capitalizing on the rental phenomenon, shifting towards a real estate investment strategy they believe will be profitable. Their wealth-building plan relies on renting the homes out for a profit, planning to sell only when the economy fully recovers
Investors are buying foreclosure homes at discount and taking advantage of the hot rental market. As of January, investors were making an average 8.6 percent return on their investments annually, according to CoreLogic. That’s a 3 percent increase from 2006. There are 21 million units in the country’s single-family rental inventory, putting the size of the market at a massive $3 trillion dollars.
The private equity firm Blackstone Group made news recently when it bought 2,000 single-family homes for nearly $300 million. Fortune Magazine calls it “one of the biggest piles of homes ever intentionally put together by an institutional investor” but Blackstone is just one of many groups purchasing homes in bulk.
Rental Home Vacancies Are at 2002 Lows
Renters in Naples and throughout the country are struggling to find available apartments and rental homes. They are facing diminishing vacancy rates and higher monthly rents.
The residential rental vacancy rate was at 8.6%, the lowest 2Q reading since 2002, reported the Department of Commerce Census Bureau. While the diminishing supply is bad news for the multitudes of former homeowners now looking to rent, it comes as welcome news to the growing number of investors who are building portfolios of single-family rental properties.
Analysts say that as the vacancy rate sinks lower, renters will likely face higher rents. Investors who have in recent months been purchasing single-family homes to turn into rentals may see a big boon as former home owners and renters look for more available places to rent, according to Capital Economics.
Rental Home Rates are Rising
It is expected millions of borrowers are headed toward future foreclosure and may flood the rental market. If that happens, it could continue to push up rental prices and lure more investors into the market. “In the next five to 10 years, you’ll see tens of billions, if not hundreds of billions, of dollars of private equity” pouring into the single-family rental business, says Justin Chang, principal of investment firm ColonyCapital.
Rental Homes Offer Long Term Investment Opportunity
The foreclosure crisis will drive 3 million former homeowners to rent single-family homes between 2010 and 2015, Burns estimates. That’s three of four homeowners who lose homes to foreclosure or other mortgage distress. The single-family home rental was the fastest-growing part of the rental market from 2005 to 2010, Fannie Mae says, citing U.S. Census data. Its continued growth is “unprecedented,” Burns adds.
The Naples rental market offers financial opportunities for second home buyers, snow birds and private investors. Properties can be rented on a monthly, seasonal or annual basis, allowing the owner to use the property when their schedule allows.
Rentals in Naples are in demand and supply is scarce. I personally spent the past two months helping a client locate an annual rental and it wasn’t easy to find. If you would like more information on investment and rental opportunities in the Naples area, please contact me at 239-370-0200 or send me an e-mail. Don’t wait while housing prices rise and inventory falls further.
Call today, together we will find your new home in Paradise!