Win to Investors and Tenants Ever since home prices have taken a swan dive and decreased more than 50% in many metropolitan cities, millions of people have been left with the unfortunate 'foreclosure' tag on their once dream home. These millions of families throughout America did not just pack their bags and move to Canada, Mexico, or some other foreign nation they stayed in their home towns and simply switched from being an owner to being a renter. The normal American thought of 'apartment renters' are typically younger, early established people who are just beginning to spread their wings into adult life. However according to the U.S. Census Bureau the age demographic has increased along with the size of families living in apartments and rental properties. With such an increase in demand for rental properties, the 'gold rush' of properties in America for investors is at an all time high. Being able to purchase properties for fractions of previous values with a large capitalized net return presents a golden opportunity for investors. It is estimated that due to the foreclosure crisis there will be 3 million former homeowners switching to renting single family homes within the next 3 years. In other terms, 3/4 of those who have faced foreclosure will be renting single families post foreclosure. Fannie Mae (sourcing U.S. census) says that the single family home rental market was growing faster than ever between 2005 and 2010, however the continued growth certainly is unprecedented. With the incredibly lucrative returns upwards to 16% Net Yearly, there are private equity and capital companies investing billions into these housing markets to capitalize on the high returns and long term growth factors. These single family rental homes are no longer looked upon as 'temporary' residences for those who rent them with the notion of the owner sooner or later moving back since they are strictly investment properties. Many renters make the house they are living in a 'home' as you would look upon it. Although it is common to see tenancy agreements to range from 12 to 24 months, the length of stay is going to be increasing by years at a time as children settle into the local schools and the natural home presence settles in. Benefiting More Than Just Investors When a house is in foreclosure the effects are felt more than by just the unfortunate previous owner but the ripple effect is felt by the entire neighborhood. Renters not only help the investor make money but also increase the overall value and morale of the neighborhood. Rather than a house sitting vacant with weeds growing, unsightly plants and bushes expanded there is now respectable families living there not only taking care of the property but doing minor improvements to increase the houses appeal. Sooner or later, it is inevitable that those who faced foreclosure will in fact own a home again. A recent survey from 'Harris Interactive' commissioned by Coldwell Banker found that 83% of renters want to own a home. No matter how comfortable and happy you may be in a rental property, there is no satisfaction as obtaining what many would call the "American Dream". When this transition begins to happen many investors will begin to see a diminish in demand in rental property, however this is when the large benefit of owning property becomes more foreseeable. Capital appreciation to some is more valuable than any annual rental yield, and when demand for home ownership begins to rise, the value of their investment property will follow respectively.
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