As first quarter 2016 (Jan, Feb, Mar) came to a close, it was clear that early 2016 has been strong for both landlords and home sellers.
Vacancy rate is the percentage of unoccupied or vacant rentals of the total number of rentals in a designated market. It’s a common metric to measure the strength of the rental market. The U.S. Census Bureau reports that the national rental vacancy rate closed at 7.0% for 1Q 2016. That rate has stayed fairly consistent over the past year, but the blue graph to the right shows how low the monthly vacancy rate is compared to the past seven years. So, what does a low vacancy rate mean for investment property owners? When vacancy rates are low, rent prices rise as tenants scramble to find properties. The red graph to the right shows that March 2016 had the highest median monthly rent in Minneapolis over the past 12 months. Simply Residential used those statistics to justify recommendations of rental rate increases for a number of our properties during 1Q 2016. Low vacancy rates also mean rentals are on the market for less time. We saw this firsthand last month, as 1/3 of our March new lease signings occurred within a week of being marketed.
Real Estate Sales
As job and wage growth slowly drive the country’s recovery from the recession, we’re seeing a renewed consumer confidence. Couple the interested buyers with a low inventory of homes for sale and we have a seller’s market. Homesmsp.com reports that there was a 20.6% decrease in Twin Cities homes on the market in March 2016 compared to March of last year. The multi-colored graph to the right shows how much higher the median sales price was in March 2016 compared to March in previous years. If you’re considering selling your investment property, please speak with us. Along with providing rental property management services, our on-staff licensed real estate agent and broker are happy to provide you a comparable market analysis (CMA) so you can properly consider the options of renting and selling your property. Also, know that we offer special real estate service pricing to our current property management clients.
Whether you’re renting or selling, Simply Residential Property Management’s leasing and sales team has you covered. The first quarter results from 2016 show that both the property rental and home sales markets are very strong. Simply Residential will continue to monitor important factors including the interest rate and the local vacancy rate. But it’s clear that now is a fabulous time to rent out or sell property.
On a daily basis, property owners throughout the Twin Cities mull over the idea of renting out their home. How would I do it? Is this the right time? What if something goes wrong? Just the thought of moving out of your prized possession and opening it up to total strangers can be scary. But know that property owners make the decision to rent their property every day. And it doesn’t need to be intimidating. Before bogging yourself down in the details of renting your home, let’s first look at a list of key reasons why someone would consider renting out their property.
- You want to expand your wallet
Who couldn’t use an additional income source? Renting out your property is a viable money-making venture if you’re able to bring in enough rental income to cover the mortgage, expenses and allow some income for yourself. One of the most popular questions property owners ask is what their property will rent for. There are many factors that influence the amount. Simply Residential Property Management conducts a thorough market analysis of the property, which reviews the market, the competition in the neighborhood and the interior and exterior condition of the property. Our goal is to produce a competitive price while also providing you with the highest return. With this market analysis in hand, we allow the owner to decide on the final price.
- You are no longer able to stay in your current home
There are a number of reasons a property owner may choose to leave a home. Perhaps it’s due to a job transfer to another market. A budding relationship may mean leaving an existing home behind. Sometimes an owner will run into cash flow problems and no longer be able to cover mortgage and home expenses. No matter the reason, renting out your home can be a solid temporary solution. And whereas selling is permanent, renting gives you a fallback option to take up residence again some day.
- The market just doesn’t want to let you go
As property owners, we’re all at the mercy of the market to some degree. We may be ready to sell our home but if the market isn’t going to give us the selling price we want, we need to wait. But this temporary phase need not be painful. Take some time to allow the market to adjust by renting your home. While Twin Cities’ property values are still recovering from years past, signs are clearly pointing to continued growth in the market during 2016 and going forward.
- The tax man cometh…and giveth
Last but not least…taxes. No one likes taxes but how about tax deductions? Renting a property means deducting many costs. The cost of independent contractors like roofers, painters and other maintenance workers can be deducted from costs of a rental home. Rental property expenses like utilities and travel costs when doing business can be deducted. Even landlord insurance is a deductible expense. The word ‘taxes’ never sounded so sweet.
Did any of these reasons resonate with you? If so, it’s time to take the next step and research what it takes to rent out your home. The Simply Residential Property Management website has an excellent FAQ section that answers many questions that property owners have. In addition, we have a free rental property analysis on our website that allows us to provide a custom quote. Our staff would be happy to sit down and discuss your goals and concerns. Happy Renting!