MY TAKE: Creative Investing for Passive Returns
with less than perfect credit, and continued challenges with afford- ability for home purchasers, many Millennials are inclined to rent rather than buy, helping bolster rent growth. AN EMERGING ASSET CLASS SFR as an asset class has also been growing in popularity. Insti- tutional investors started buying in earnest in early 2012, and today about 300,000 homes are owned by institu- tions. While it may seem like a lot, it represents less than two percent of the 16 million SFRs that represent about $3 trillion in value nationally, with the vast majority owned by mom and pop investors. In 2018, SFRs saw increased attention from new inves- tors both large and small, partly due to higher volatility in equity markets, which led some to examine different ways to diversify their portfolios.
U.S. HOME PRICE APPRECIATION AND RENT GROWTH
MEDIAN ASKING RENT
HOME OWNERSHIP RATE
$1,000
70.0%
68.0%
$900
66.0%
$800
64.0%
$700
62.0%
$600
60.0%
$500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
U.S. HOME PRICE APPRECIATION AND RENT GROWTH
For those looking to creatively augment their portfolios as we continue to ride the ups and downs of the stock market roller coaster, investors should consider single- family rentals as one arrow in their quivers. Given where we are in the economic cycle, with many economists predict- ing a recession by the end of 2020, the timing may be ideal for many inves- tors to consider taking advantage of
growing rental demand while interest rates are still relatively low. The power of compounding also adds to the allure of investing in SFRs, which have the ability to generate cash flow over time while building equity value via appreci- ation and principal paydown. A number of factors make the SFR market attractive for investors looking to build long-term wealth, establish a monthly income stream, take advantage of tax benefits, and diversify away from stock mar- ket volatility. For those looking to creatively augment their portfolios as we continue to ride the ups and downs of the stock market roller coaster, investors should consid- er single-family rentals as one arrow in their quivers. There are many ways to get started, including finding properties on your own and acquiring, renovating, leasing and
managing them, or leveraging on- line platforms like Roofstock, which is a platform to research and invest in properties around the country from the comfort of your phone or laptop. Increasingly, platforms like Roofstock are redefining what’s possible in the real estate industry as we enter a new era where tech- nology-driven platforms increas- ingly allow clients not only access to great content, which was Real Estate 1.0 (companies like Zillow and Trulia), but to commerce , which is Real Estate 2.0 (companies like Roofstock, Opendoor and Cadre).
% HOME PRICE APPRECIATION YOY
% RENT GROWTH YOY
15
13
10
9
9
7
7
7
6
6
5
5
5
4
4
4
4
3
3
3
3
3
2
2
2
2
2
1
0.4
-3
-4
-5
-6
2008 -11
2009
2010
2011
2015
2016
2007
2013
2004
2003
2014
2001
2006
2012
2005
2002
2017
Gary Beasley is CEO and Co-Founder of Roofstock, an online marketplace for buy- ing, selling and owning single-family rental investment homes.
SOURCE: John Burns Real Estate Consulting 2018
18 think realty housing news report
august 2019 19
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