In Orlando, Florida, and many other areas of the country, it could be a great time to be a landlord. Although there is a growing demand for apartment facilities and multi-family housing, the demand is not being met because developers are simply not in a position to build. As a result, rents could rise by double digits this year, predict many market analysts[1]. “I’ve never seen so much pent-up demand [for rental housing]” said Jay Jacobson, a partner at national development and investment firm Wood Partners. Jacobson’s company’s rental portfolio is currently at 96.5 percent occupancy, and rents are already heading up.
Jacobson explains the rental surge this way: “Why the demand? It’s…darn near impossible to get a mortgage. And we have this huge population in the biggest rental cohort about to hit the market.” While builders and developer would love to take advantage of this coming flood of renters, they, too, are hindered by financing. “We’d love to build more,” explained William McLaughlin, an executive vice president with Avalon Bay Communities, “but is it just taking longer to get in the ground.” Avalon Bay can secure funding for developments, though the process has gotten much more time-consuming, but many developers simply cannot get traditional financing and are having to “get creative” by finding independent investors or financing their projects using low-income-housing tax credits.
Do you own rentals? If not, are you planning to invest in 2011?
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[1] http://www.marketwatch.com/story/double-digit-rent-hikes-are-on-the-way-2011-01-13
