Posted by: phillipsre | November 11, 2011

Rent vs. Buy – Investors Buy So More People Can Rent

We have talked about whether or not it is better to rent or buy in previous posts. But it looks like the market for rentals and commercial/multi-family loans are on the rise. In a recent article from CoStar Group, A Commercial Real Estate Information company, they are finding that the rental housing wave is on the rise. And it’s not just the 20-somethings out of college that are looking for a place to live (rather than going back to live with their parents). People are viewing renting as a smart choice and not just a compromise when you are not in a position to buy. Surprising, people would prefer to have less debt and more flexibility – really how bad does that sound?

The commercial and mult-family developers are also watching this trend, which is why we are seeing new apartment buildings popping up all over the place. According to Bloomberg, US Commercial-Property lending has risen to the highest it has seen since 2007. For investors this does make sense, in a multi-family loan you have many different people/tenants in your building that will be paying rent, therefore you are generally able to have enough cash flow to keep your loan current. With a residential loan/investment, when you just have one tenant and that person loses their job and can’t pay the rent, then the investor can’t pay the mortgage.

Interesting times we are living in. It seems like it’s the right time to be an investor and the right time to be a renter. If you are curious on whether it makes sense in your personal situation to rent vs. buy – check out this Rent vs. Buy Calculator from our friends at Cobalt Mortgage.


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