Have you noticed an increased period of holding time on your fix and flip project? In other words, is it taking longer for you to see that big pile of cash you were expecting by quickly selling that home you just spent the past few months remodeling? If so, there’s probably a very good reason for that. And as such, you may want to take another look at your real estate investing strategy.
In a recent study, RentCafe, a nation-wide apartment search website, analyzed the largest 100 cities by population and compared the number of people living in renter and owner-occupied units in 2006 and 2016. The population data used in this research was provided by the U.S. Census Bureau’s public databases.
According to data from the report, the number of families across the country who own their home has decreased by nearly 3.6 million. And the Phoenix metro area has seen a 42 percent increase in families with children renting during the past decade. The report also shows the number of families that owned homes in Phoenix dropped by 12 percent during that same period. According to the Census Bureau, the current economic climate, declining birthrate and the high cost of raising children have been detrimental to families wishing to become homeowners.
Included in the top 10 cities nationwide where the renter ratio has increased the most are Gilbert, Mesa and Glendale. The study also showed that from 2013 to 2015, the median price of a single-family home in Phoenix increased by 45 percent while the average rent grew by 39 percent.
So, it’s not surprising to find that fix and flippers here in the Phoenix area may have to sit on their property for longer than expected periods of time. It basically boils down to supply and demand.
This may seem like bad news for some. But for those who have taken the buy and hold path of real estate wealth creation, it appears to be a golden opportunity. It’s also yet another indication that those who become truly wealthy in real estate are in it for the long term.
Many would be investors we speak to understand the many benefits of buy and hold real estate investing, but at the same time have expressed their challenges with us. Namely, they don’t have the cash to purchase a rental property, nor can they secure a traditional
mortgage due to personal income verification requirements.
The good news is that that many banks, credit unions and mortgage lenders have begun to re-introduce limited and reduced income documentation mortgages. Please see my full article in the August 2018 AZREIA Newsletter. Or find the full article on the web at TheEquityFinders.com/blog.
Here at The Equity Finders we work with realtors who work with investors. Our smart map comping system not only helps our clients to locate properties with equity, it also calculates After Repair Value (ARV) and Return On Investment (ROI). In addition, Smart Map Systems also provides “accurate” rental data for buy and rent investors.
In closing, I would like to encourage you to visit our website at TheEquityFinders.com to learn more. While you’re there, be sure to sign up to receive our complimentary video series called, “How To Become Wealthy In Real Estate The Smart Way.”
by Laura Leatherdale