Whether the economy continues growing or turns downward, most housing market experts have forecast the demand for rental units is likely to go up in 2019. This is good news for landlords, buy-and-hold investors, and flippers working with private mortgage lenders in PA.
Economic shift and the high demand for rentals
A few economists believe the stock market will get back on course for higher growth in 2019, but most economists now think the market is heading for correction and the economy is likely to enter recession. The housing market has already been cooling in Pennsylvania, and especially in Philadelphia where housing values held even with the previous year for two quarters in 2018. Whether the economy grows or enters recession, the Federal Reserve is clearly intent on raising interest rates which will result in less people qualifying for mortgages and a growing demand for rental housing.
High demand for rentals can feed higher demand
More new apartment buildings scheduled to complete construction in Philadelphia in 2019 may help to meet the demand for rentals. Buy-and-hold investors renting out houses may see some decline in the number of tenant applications, but it’s unlikely that demand will lessen to the point of drawing rental rates down. As we just mentioned the rising interest rates on mortgages will likely add more people to the list of those needing rental housing. If the high demand does continue this could lead to an increase in the city’s rental rates which could make it harder for renters to save up for a down payment and keep more people renting and, thus, sustain or even help to increase the demand level.
Flippers could find more deals and increase the rental housing stock
No one likes to see people forced to sell their houses at a discount, but, unfortunately that is a common consequence of the economy moving into recession. People losing jobs or unable to keep up with higher interest rates will need to sell their houses. Absentee owners of properties they haven’t developed may feel greater pressure to liquidate these assets. Flippers who can find these good deals and have working relationships with private mortgage lenders in PA will be able to take advantage of these new opportunities.
Given the high demand for rentals, some flippers will even the benefit of changing their strategy from fix-and-flip and resell to BRRRR – Buy, Rehab, Rent Out, Refinance and Repeat. Another option for those flippers reselling retail would be to rehab to a rental-level quality and resell turnkey to buy-and-hold investors.
Legacy Capital is ready to help real estate investors who have acquired good properties for rehab, but need additional money to fund the rehab. We’d like to show you why many other investors have chosen Legacy Capital from other private mortgage lenders in PA.