My biggest pet peeve is when people tell me that I am lucky.
They say things like, “You are so lucky you get all the good deals,” or “You are so lucky your tenants always renew their leases” or “You get all the good tenants” or “You can take off time whenever you want to while we have to work every day.”
I certainly do not consider myself lucky in the same capacity they suggest but yes, I always tell them “Luck is when preparation meets opportunity.”
I spend much of my time getting prepared (hard work and diligence) so when opportunity exists I can benefit from it. I am always sharing with my investor clients that they can be as lucky as they wish by being purposeful and diligent so when their preparedness meets opportunity they can enjoy the benefit of where they are positioned.
Renting is expanding while homeownership is contracting
Today investors are lucky. We indeed are living in a time where investors (by that definition) are lucky.
Household formation is on the rise and the percentage of households that is choosing to rent is also increasing.
This supply and demand is in favor of the landlord which means rents are also on the rise.
As many articles from sources like Yahoo Finance the National Association of Realtors, Mortgage magazine, etc. all mimic a similar sentiment. A growing number of people are feeling comfortable not being tied down to the obligation of homeownership right now.
In fact with today’s fast-paced global economy, many feel they may lose opportunity if they are tied down to homeownership. All this suggests landlords have a great opportunity to build a long and thriving business.
You can be comforted in knowing most tenants are not renting because they feel forced to after a bad economy. While this does affect some of the tenants, most are choosing to rent as a lifestyle choice, and you as an investor can fulfill that need.
Americans are rebooting their housing outlook
I often get queries from my foreign investors about the fall of the homeownership rates.
They are wondering if the American dream has been lost and if so, what does that do to the housing market?
I do not believe at all that the American dream has been lost. It simply is taking on a slightly different form. Americans have rebooted and today are taking great comfort in having mobility without the financial obligations of a mortgage.
We simply are going through a cycle of more tenants and fewer homeowners. Yahoo Finance reports there has been a 4.5% drop in homeownership and we are now at homeownership rates of 1995.
In fact, the consumer confidence was reporting 14% higher than it is today. The ease in which financing was available from the mid-‘90s until the bubble burst indeed created the largest ownership rate of all times. This was inaccurately inflated, as we now know, because many of these new homeowners really did not have any business owning a home as they did not have the proper income or desire to be held to obligations of mortgages.
Having lived and worked within the industry for the past two decades, I believe a very clear picture has been painted.
The National Association of Realtors (as well as many other organizations) has verified that a household’s wealth is much stronger when they own a home. With good intentions, this prompted a movement to aid as many people as possible into homeownership. This was a plan that proved to be too aggressive in nature and now we are simply resetting or rebooting.
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