It’s no secret that giant investment firms like Blackstone Group are purchasing foreclosed homes in South Florida at discount and in bulk. The intent of these firms is to rent the homes for a few years and then sell them at a profit.
But who is renting these South Florida homes? It’s not just young families. In fact, according to a survey of property managers by Rent.com, there has been a very large uptick in the number of single young people who are moving out of mom and dad’s house and moving into their own rental homes or apartments, either alone or with friends.
Low vacancy rates keep rental rates high.
This surge in rental demand has resulted in an extremely low vacancy rate of only 4.3% on average across the entire nation. No wonder rents keep increasing. The demand is extraordinary.
While economists predict that rental numbers may moderate a bit, they’re suggesting that the vacancy rate will adjust upward only about 6/10 of a percent within the next 3 years. Fewer than 600,000 new rental units in multifamily buildings around the country are in the planning stages through 2016, which may account for the lack of planned vacancy.
2 million college graduates every year need a place to live.
With more than 4100 public and private 2 and 4 year colleges every year granting approximately 1.5 million bachelors degrees and 700,000 associates degrees, according to the U.S. Dept. of Education, the demand for rentals looks to be unceasing.
In fact, based on continuing demand, South Florida rents, whether for apartments or single family homes, are likely to increase over the course of the next 12 months.
Demand exceeds supply. Good time to invest in multi-family property.
Even if additional multi-family units, whether large or small, are constructed in South Florida and across the nation, it is unlikely that supply will catch up to demand.
So if you’re thinking of going into the landlord business, this is probably an excellent time to find multi-family property in South Florida to invest in. If those properties are well kept up, you are likely to have a very low rate of vacancy – and a comfortable rate of return– because single young people and families who can’t afford to purchase homes will always need a place to live.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions