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Insights

The Changing Face of the Rental Market

https://www.keycitycapital.com/insights/the-changing-face-of-the-rental-market/

According to a recent report from the New York Federal Reserve, consumer debt hit a new record at the end of 2022—$16.9 trillion—up about $1.3 trillion from a year ago as balances rose across all major categories.

In addition, increases in delinquencies were seen across mortgages, auto loans and credit cards. Jeff Cox of CNBC reported that the rise in balances came amid an aggressive rate-hiking campaign from the Fed as it battled inflation running near its highest levels in more than 41 years.

Between the increase in debt, record-high interest rates, and low inventory in the home sellers’ market, we’ve seen a marked increase of interest in rental properties. Another interesting statistic we’re seeing is the broad range of demographics flocking to rentals. In the past, most viewed your typical renter as an individual just starting out on their own or maybe a lower-income worker, both working toward saving for a home.

What we’re seeing now is a rental market that is increasingly appealing to young professionals who make a good salary but are looking for more freedom in their living situation—the ability more easily pick up and move to a new location based on their job or lifestyle. On the other end of the spectrum, the market is also picking up with recent retirees who are eager to shed the responsibilities of owning a large home and enjoy the freedom of a smaller space managed by someone else—allowing them to travel and even maintain more than one residence in different locations.

This expansion in the rental market is just one of the many reasons KeyCity Capital targets acquisitions in cash-flowing multifamily income producing properties across a range of markets, including A, B and C-class markets. These markets cover a wide range of properties from A-class properties, newer, turnkey builds that attract higher-income renters, to older properties, often without professional property management that may cater to lower-income renters and likely require renovations.

We also utilize a geographical target criteria utilizing the same formula regional banks use when targeting locations for branch cities and locations to ensure a consistent, dependable flow of renters. Specifically, we target locations:

  • with higher education institutions, colleges and universities
  • with medical facilities and hospitals, specifically those with a residency program
  • with a regional or national bank
  • that exhibit market growth, signs of which include increasing incomes, job creation and population growth.

We also avoid markets where there is economic dependence on a single employer or a specific industry segment.

It’s our belief that, when combined with our team’s expertise, proven management operations and investment experience, this asset class can provide consistent and attractive risk-adjusted returns across diverse economic environments. As such, this type of investment could be very useful for individuals looking to diversify or expand their current portfolios.

INSIGHTS

Multimedia

The Future of Homeownership: Tie Lasater Talks Interest Rates, Apartment Vacancies| Hugh Hewitt Show

August 27, 2024

In this insightful interview, Tie Lasater, CEO of KeyCity Capital, joins Hugh Hewitt on The Hugh Hewitt Show to discuss critical issues affecting the housing market, including rising interest rates, apartment vacancies, and the changing...

Multimedia

Investing in the Sun Belt: Stephen Patterson Talks Tax Advantages & Diversification with Hugh Hewitt

August 16, 2024

In this enlightening conversation, Stephen Patterson, Chief Client Officer of KeyCity Capital, joins Hugh Hewitt on The Hugh Hewitt Show to discuss how investing in rental properties in the Sun Belt can provide lucrative opportunities...

Blog Posts

Is Higher for Longer Almost Over?

August 15, 2024

It’s been almost a year since the last increase in interest rate by the Fed. Inflation was moving at an unsustainable pace and the labor market was red hot. By all standards, the economy was...