Analysts estimate that over the next few years, about 6 million more homes will fall into foreclosure. While this is certainly not good news for the properties themselves, it also means that many of those homeowners will become renters. The rental market has been favorable for landlords recently, setting records for low vacancy rates in many major U.S. cities.
The landlord-tenant relationship can be very beneficial for both parties if the home is in good repair and the lease is drawn up carefully. A well-written agreement can help avoid many conflicts during the course of lease and provide for resolution methods when disagreements do arise.
The percentage of people in the United States that own homes was at an all-time high in 2004, at about 70 percent. Since then, home values have decreased significantly. Experts expect the market to hit its bottom within the next year, at which point many anticipate that property values will recover. Meanwhile, it is still a good time to own a rental property.
We have previously discussed the potential for investment firms to engage in large-scale purchases of foreclosed properties and converting them into rentals.
Industry experts say that government intervention may be required to incentivize this practice, but that the likely candidates for this sort of program (Fannie Mae and Freddie Mac) are too politically polarizing to make it work.
If you’re interested in converting a property that you own into a rental property, contact an attorney that works in this area of law for more information about how to accomplish this.
Source: Bloomberg, “Millions More U.S. Homeowners to Rent, Pimco’s Simon Says,” Jody Shenn and Tom Keene, April 24, 2012.