For Landlords, The Numbers Are Starting To Look Better

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Home prices are falling, rents are tumbling, and apartment vacancies are rising. So why are thousands of small investors becoming landlords?

Because real-estate prices have fallen much faster than rents, the math of buying a rental has actually improved substantially in most parts of the country. Money invested in an apartment complex today typically generates annual returns of 7% to 8% right off the bat, up from less than 6% at the peak of the housing bubble in 2006.

If your property appreciates in value or rents rise, you could end up with double-digit annualized returns when you sell it. But higher returns usually come with higher risks. If you overpay for a rental property or you buy in the wrong market at the wrong time, you can lose a lot of money.

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1 Response

  1. Avatar Joanne Lobeski Snyde says:

    I know of no renter in Shasta County whose rent was decreased because of the economy. "Rents tumbling"? Please tell me that rents did decrease for people who have been hard-hit by the economic situation.