Posted on Monday, October 10, 2011
We have a client who recently bought a home and rented the property the next day – on an annual lease. We saw the same behavior when visiting Chicago recently with rental properties renting quickly – just like the pre-2007 days when you needed to move quickly to buy a new property. What is going on here?
The Orlando Sentinel – just north of us – made a similar observation. Orlando Sentinel columnist Beth Kassab: Rentals market back on track Sept. 28, 2011 – An investor paid cash last month for a four-bedroom, three-bathroom house with a three-car garage in the Lee Vista area and immediately had a pool of potential renters competing to move in. “I stuck a sign in the yard, put it on the MLS and had two dozen showings within three days,” said real estate agent B.J. Edens of Re/Max Town Centre, who handled the property. “Things are crazy out there … I’m expecting it to continue for a little while until we start to see the loan market loosen up.” Today’s rental market has the hallmarks of the frenzied housing market circa 2006, when buyers were willing to ask, “Where do a I sign?” before they even walked through a property. But this is no bubble. This is the beginning of the correction of the market’s radical over-correction.
At NaplesBestAddresses we are thinking, just by the numbers, inventories in Naples are down, prices are up but sales volume is mostly flat. We think people remain buyer-shy, even at these financing rates. BUT, there is an emerging (maybe re-emerging is better) breed of buyer who may buy and try out this rental market – we are hearing a couple of things from our clients:
1) “The stock markets are down and at this point I am starting to like Naples Real Estate again – especially if my rents can make me cash flow neutral or better”.
2) “I am going to retire down the road and I do not want to be priced out of the Naples market – so I will buy my retirement place now and rent it”.
3) “Finances are tight this year and we just will not make it to Naples for the season, so we are going to rent our Naples place this year”.
4) “I am new to Naples and a little real estate gun shy – I am going to rent for a year or two and figure out where I want to live”.
All this seems to bode well for the rental market. We are planning to gather some hard data – like what is the average monthly rent amount doing – growing? Can rents make you cash flow positive? Are there home warranty options that make renting more hassle free? Which Naples neighborhoods make the best rental investment – is it really the beach? – what about off beach low income, or inland golf course? We are on the case and will track this further but it looks like rentals may be an emerging Naples market.
What are your thoughts on the rental market today?