In the midst of a pandemic, an economic downturn, and political unrest there are some bright spots. Home rentals in America have stayed strong throughout these turbulent months, and are proving to be great investments for people looking to redistribute their assets into different markets. How did this trend come about? And how can you begin to profit from this during these hard times?
Pre-Pandemic Attitudes
Even before the pandemic, the rising price of homes in America taunted young people. Not only were homes unaffordable, but young people also had to cope with higher student debt, and general trends showed that large homes were unsavory due to various environmental reasons. The trend towards downsizing your home to just the necessities gained traction with tiny homes, bus renovations, and many people finding enjoyment in influencers who encouraged this lifestyle as a result of the housing crash of 2008. This lifestyle worked when coffee shops acted as workspaces, the gym was separate from the home, and more time was being spent out of the house. In March, this all changed.
COVID-19
With many states going into emergency lockdown and the disruption of everyday life, COVID-19 has forced people to make their homes, their places of work, their gym, and their constant entertainment hubs. With already limited space for many, it’s proving to be a problem. The people who once loved their downsized lifestyle are struggling to create the spaces they need in the midst of the pandemic. An Article from the Wall Street Journal points out that “Investors who spent the last decade gobbling up these types of houses are emerging as beneficiaries of the COVID-19 era.” What this points to is the appeal of renting large homes to families who otherwise would not have needed this space, and cannot afford to live in larger homes permanently.
Investing Wisely
In 2008, most Americans held their wealth in the homes that they owned. With the crash, much of the wealth that these people had bet on was gone. The economic downturn led to decreasing homeownership among younger people who had crippling student debt and other financial pain points, on top of median incomes dropping to numbers that were no longer able to afford homes that were previously within reach.
The investment firm American Homes 4 Rent, originally founded by B.Wayne Hughes, has profited immensely from the pandemic. Citing that in May their “showings to prospective tenants were up 22% year over year and more than 2,400 leases were signed, the most in a month since 2015.” This trend continues to grow, with more and more investment companies looking to add more homes to their list of residential rental properties, but why? Families with children now need larger places to live in the midst of the pandemic and are most likely to stay in these rental homes for longer periods of time to keep normalcy in their children’s lives. The appeal of these rental homes is the life that comes with it, including good school districts, large-enough homes, and not having to worry about a mortgage that they cannot afford in the area.
Solution
Many companies bought up foreclosed homes, flipped them, and began renting to the middle-class Americans who sought out the lifestyle that these homes come with.
From these investment companies’ point of view, by buying up many of these foreclosed homes they were helping to stabilize the market. Giving people the chance to reclaim these homes without the same stipulations that comes with buying a home. Investing in rental properties right now is a great way to diversify your portfolio during these uncertain times. Companies like WiscoTurnkey have seen a positive return during the pandemic and the data points to positive returns from housing rentals. Turnkey is a great opportunity for you to get involved in the current economic and demographic shifts that have been created by yet another housing bubble and COVID-19. Give us a call today to learn more about investing in Northeast Wisconsin rental market and how you can diversify your portfolio: 920.215.2445
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