All Things Real Estate: ls the rental market where your money should be?

The forbearance for those not having to pay their mortgages during the COVID-19 pandemic is about to end on June 30, unless it is extended once again.

Although, one can never predict what course the government might take at the last minute. But at the same moment in time, I am quite concerned for those small landlords who cannot collect a dime for rent and who depend on the cash flow to pay their own mortgages.

Potentially millions of homes might just be coming into the market as the majority of them have positive equity and it will obviously be an excellent time to sell and taking advantage of this still “hot market” especially if they will have to begin paying their mortgages.

However, those who are selling will have to find a place to live. Rentals will most likely be the option that they will choose as purchasing again might be way too challenging.

So owning rentals will be an excellent asset to possess as the return should be greater, safer, and more stable over the long run than most other investments. However, where you choose to buy rental property will depend on your return on investment.

Long Island and the general New York area are quite pricey at the moment so your return might not be what you are looking for or make financial sense.

However, as an example, states like Texas, Florida, North Carolina, and others are better locations to secure rental properties.

As Ray Dalio has said repeatedly (founder of Bridgewater Associates the world’s largest hedge fund), “cash is trash” and many still haven’t realized this and won’t until it is way too late.

What better place to put your declining value paper dollars in the bank but into rental properties? Our currency might be at a pivotal point of drastic change, with Bitcoin and cryptocurrencies slowly emerging in popularity. With inflation raising its ugly head one needs more dollars to pay for food and commodities.

So the cost of living has been increasing over the last year and some say it’s temporary and others feel the opposite and that it is just the beginning. The more I read the more I feel confident and sad at the same time that there will be millions more renting going forward after the forbearance on mortgages cease.

Currently, the ownership rate is 68+ percent, which in 2008 was 74+ percent because of lax mortgage requirements. Back then if you had a pulse, you could get a mortgage with very little documentation (called no doc loans).

Prior to the run-up in 2008 and subsequent implosion in the market, generally, the normal ownership rate had been around 63 percent. Going forward there will be a retraction in ownership back to more normal levels and a greater move to rentals.

However, will there even be a sufficient amount of new inventory for sale to those who qualify as well as rentals to satisfy the demand? Probably not as several million; potential new buyers enter the market each and every year.

From what I have read and researched, it looks bleak for many who want to establish homeownership creating and accumulating their future wealth; which would be passed on to their future children and family members.

There will be many who will not be able to purchase and will have to opt for renting for possibly long periods of time for the foreseeable future. The wealth gap with the haves and have not’s will grow wider and the necessary solutions and remedies will have to be strategized in order for more to prosper.

But I believe one of the ways to accomplish homeownership will be greater and more in-depth financial and motivational education as well as learning how to become an entrepreneur to be able to create more than one stream of income.

This will also incubate and grow the minds of future investors hopefully leading to satisfying the increasing demand for our current housing dilemma.

re is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 in Great Neck. He has 39 years of experience in the Real Estate industry and has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S). For a “FREE” 15 minute consultation, a value analysis of your home, or to answer any of your questions or concerns he can be reached by cell: (516) 647-4289 or by email: [email protected] ra

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Philip A Raices

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