How To Invest In Real Estate When The Bubble Deflates
Abstract
Local data can tell you if there will be strong or weak demand for housing, in what rent range you find the heart of the rental market, and what type of investment will fare best in the local housing mix. In 2021, the bulk of renters paid between $1,007 and $1,524 monthly rent; add about five percent to bring that up to 2022 dollars. The ratio of the average home price to the average annual rent can tell you because it's a measure of how expensive homes are compared to rents. Above 22 most homes are too expensive to rent out, so apartments or subdividing a house into renter units is easier. Below 15 homes are cheap relative to rents, so buying one and upgrading to a higher rent is a good opportunity. The average annual rent therefore was $15,252 and the ratio of home price to annual rent is 14. If you take the time to analyze the desirability of a local area, the most appropriate rent, and the most suitable type of rental for the local housing structure, you've got the best chance for a solid long-term investment.