While stricter lending guidelines are causing headaches for some potential homebuyers, it’s resulting in increased profits for investors. That’s because rent prices have slowly been on the rise and the rental market is the strongest it’s been in years.
With all the buyers who can’t qualify for loans, those who’ve lost their home to foreclosure and those who have gone through a short sale, more people than ever are needing to rent. As a result, investors have flooded into the Las Vegas market and are snatching up homes. In fact, many of the homes for sale are ending up in multiple offer situations. The majority of the transactions are cash purchases, making it more difficult for first time home buyers, or those getting a loan, to compete.
Rent gains are currently averaging 3.5 percent. If that rate holds its current pace, rents will double in the next 20 years. If they reach 5 percent, that would happen in just 14 years. And rent rates are not expected to cool. That’s because demographics show a rising number of young adults over the next 20 years.
In 2011, investor share of home purchases nationwide reached 22 percent. If the continued tough economic times and foreclosure and short sale markets continue, all signs point toward 2012 turning into a golden opportunity for investors as well.
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