Ultra-low mortgage rates mixed with housing affordability has made investing
in a rental property pay off for investors. Many investors have eyed
foreclosures, snagging them at rock-bottom prices, and turning them into
rentals. Some home owners have also used the downturn in housing to purchase
second homes and then rent out their first property, the Associated Press
reports.
Demand for rental housing remains strong. "In this market, at this point,
it's a sweet spot," says Chris Princis, a senior executive at financial advisory
firm Brook-Hollow Financial and owner of two rental properties in Chicago.
"You're getting the market where it's just starting to rebound, but still at the
bottom, with what's looking to be a great recovery."
In earning a profit on a rental investment, Princis uses a formula: He
charges 15 percent above monthly mortgage and maintenance costs. But it’s also
important to know what comparable apartments are going for, and to be flexible
in case you’re unable to find a tenant for months, experts note.
The best investments for rentals typically prove to be in areas with a strong
history of rental demand, such as neighborhoods near universities or homes in
residential areas that are near schools to attract families.
Source: “Got
Cash, Good Credit? Experts Say Owning Rental Housing Can Pay Off Even as Market
Recovers,” The Associated Press (Feb. 6, 2013)
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