INVESTING IN RENTAL PROPERTY
I am often asked if it is a good time to invest in rental property. There are many factors to consider depending on an individual’s financial situation and where and how they plan to buy rental property. However, my reply is almost always yes if they are considering purchasing on the Emerald Coast.
This area has always experienced a strong rental market. In the four decades my Wife and I have been in the long-term residential rental management business in Ft Walton Beach, we have never experienced a decline in business. The past housing bubble bust and BP oil spill had an adverse effect on property values and the short-term vacation market, but it has now turned around and doing better than ever. Property values are moving up and interest rates have stayed down making Real Estate attractive again.
One of the most important factors in our strong and stable rental market is of course the Military influence on our economy. With two Air Force Military installations and the new Army Special Operations Post all with critical missions to the welfare and safety of our country, the area has been blessed with growth and prosperity. Our beautiful beaches, water and mild temperatures attract visitors and retirees year round.
Many young military or students just starting out are content to rent without taking on mortgage debt. Coming up with a down payment or qualifying for a home loan has become more difficult and is forcing more into the rental market. The National Board of REALTORS has published numerous articles recently stating the decline in home ownership and the upward number of those renting long term. Builders and investors are looking increasingly at multi-family rental property.
Rental activity is always strongest during the summer when school is out and families are moving. Most long term management companies have their leases expire or renew between June and August. The demand for rentals in a military community can fluctuate year round depending on unit and troop movements. We have experienced a steady demand for rentals almost constantly over the past year.
Local rental inventories have increased as many homeowners are still upside down on their mortgages and have put their property into a rental program until property values catch up. Investors are buying local real estate, some of which is still in foreclosure, or priced to sell. Some contractors have been snatching up distressed property to renovate and flip for a profit, however, these are becoming harder to find. Those who are in a position to pay cash are at an advantage in negotiating a purchase price or financing options.
Those fortunate enough to be able to invest in income producing real estate should be contacting their local agent to purchase investment property now. If you are already a homeowner and trying to sell but are unable clear enough to pay off the mortgage, it is time to consider renting. It is also advisable to contact an experienced Professional Property Manager to help make owning rental property a trouble free and profitable venture.
J. Matthew Scheel