Real estate has been a long-time favorite investment for people of all backgrounds, and the sui generis nature of rental homes – shaped from the appreciation, cash flow, tax benefits, safety, and leveragability – make it one of the best investments available. 

However, a mantra in the financial world is: “past performance is no guarantee of future results.” So, is real estate investing a good idea in 2020 and beyond?

Presented here is a market analysis that will answer that question. But, I will provide the answer upfront – rental homes are and will continue to be an exceptional investment choice. Next, I will give the analysis that generated that answer. To further set the stage it is also important to note that, with trends the way they are, rental homes will become an even larger and more important market in our economy. 

What moves the market?

We have seen a massive increase in the demand for rental homes - an additional 9.1 million Americans rented since 2010, bringing the total number of American renters to above 100 million, and the Harvard’s Joint Center for Housing Study forecasts a continued net increase of 400,000 new renters per year. Super low mortgage rates combined with pent up housing demand made home sales in February 2020 the strongest they have been since 2007 – boasting a 7.2% increase in number of home sales and an 8% increase in home price over the prior year. The factors responsible for this increase in rental demand will continue to be an influence in the short and long run.

Home prices, as they outpace wages, will continue to drive rent higher, which means more appreciation and more cash flow for those who own rental homes. In fact, the national average rent payment has increased 36% in the last decade. 

Another factor for the increase in total renters has been a change in the overall demographics. Since 2010, we have seen a record 45% increase in high-income renters, where 22% of renters now make more than $75,000 annually. 

What does this mean for home investors in 2020?

That was a lot of numbers thrown out there, but the purpose was to paint a picture of the overall market, and that picture is that right now is an exceptionally good time to purchase rental homes. The rental market will continue to broaden and deepen, and what has traditionally been a strong market and smart investment will become something even more significant – It will become one of the most important markets in the U.S. Economy.  

So, what is stopping every American from benefiting from rental home investing?

There are two main reasons: first, compared to the stock market, real estate investing has traditionally been a more involved process than simply logging into your broker and buying a stock. Second, there are higher initial capital requirements. 

Our mission at Doorvest is to break down these hurdles and make real estate investing friendly and accessible, and we do that by providing a frictionless way of investing in rental homes that makes the whole process effortless.