Is Now a Good Time to Invest in Rental Units?

All across the nation, the demand for rental units is skyrocketing. Surveys have shown that single-family rental occupancy is at an all-time high in 2022, and in many places, there simply aren’t enough units to meet the demand. Despite inflation and slowing price growth, now is an excellent time to invest in rental units, including both single-family homes and multifamily units. 

The Demand Keeps Growing

The demand for rental units is so high right now that potential tenants are bidding for vacancies much like potential home buyers would bid on a home. More people are signing leases due to the improvements in the job market and low unemployment rate, and the uptick in willing renters has created a serious shortage in unit availability. The flood of renters looking for housing is giving landlords the ability to increase their prices, and renters are willing to pay. In fact, would-be renters are offering to pay higher security deposits and, in some cases, higher rents in exchange for the lease opportunity. 

There’s Plenty of Rental Income Growth Potential

Single-family rent growth is higher than it’s been in more than a decade. People who simply cannot afford to buy homes as well as those who can’t find a home to purchase are turning to rentals in record numbers, and this is pushing prices through the roof. All of the top 20 metros in the United States have seen year-over-year rent increases, too. When you invest in rental properties now, you can expect to see significant returns and growth almost immediately – as long as you are investing in the right locations and utilizing best practices when setting your rent prices. 

Even Property Value is Rising

When you buy a rental property, the tenants aren’t your only source of income. You’ll also be able to build equity as the property appreciates in value. Zillow reports that mid-price homes have increased in value by 54% in the last five years, which shows there is plenty of potential for growth. While there will be some dips here and there, the housing market continues to trend upward for investors and owners alike. 

Things to Keep in Mind

While now is an excellent time to invest in rental properties, there are a few things to keep in mind before jumping in. Numerous cities across the country still have their eviction bans in place, which makes it difficult to evict non-paying renters. As such, it’s important to be diligent in your application process. Investing in rental properties also tends to require a fairly large down payment, but there are funding options available to help you based on your unique situation. 

Even with the current inflation across the globe, and even with the Federal Reserve raising its interest rates in stages over the next year, now is a fantastic time to invest in rental properties. The demand for rental units continues to grow, and the potential for wealth is certainly there as long as you invest your money wisely.