With a continually changing and growing real estate rental market, I find it’s important to reflect on the past as well as look at the trends and growth that will carry us through this year.
Q: Do you think the rental market in Wilmington, N.C. will trend up or down in 2016?
In 2015, rental occupancy rates for both multifamily and single family residential properties remained at all-time highs. Our company both began and ended 2015 at 96.5 percent occupancy rates. This level of occupancy indicates that the demand for rentals remains high.
As the local population continues to grow, I believe demand will continue to outpace supply for rental properties in southeastern North Carolina. Rental rates grew in the 3 percent to 5 percent range for the year. As demand continues to be high, I also believe rental rates will grow in 2016 at the same pace as 2015.
As a point of reference, since the recession started in 2008, rental rates in our area have appreciated more than 25 percent. This level of appreciation is greater than the rebound in housing prices during the same period of time.
Q: Why is the Cape Fear region one of the best spots in the United States to invest in rental property?
Our population is growing at an unprecedented pace. In the real estate community, there is a little joke about the correlation between the severity of winters in the northeast and the subsequent spike in housing activity in the southeast. This is generally a good indicator, but there also is a correlation between the housing market performance in the northeast and people having the ability to sell their house at the right price and time to move south.
In addition, our local economy is seeing increasing numbers of higher-paying jobs with the success of companies like Live Oak, nCino, Castle Branch and PPD. Taken together with appreciating rental rates, low debt costs and high occupancies, owning rental property in southeastern North Carolina is proving to be a wise investment.
There is a general feeling that overall home ownership rates won’t change significantly over the next several years because of the challenges younger people face in qualifying for mortgages and the amount of school debt they carry. Overall, the younger demographic is staying in rental properties longer than previous generations.
Q: If I am going to invest in rental property in Wilmington, N.C., what do I need to consider?
The two most critical factors are location and property features. If you subscribe to the theory that part of the reason rental housing is performing well is because typical first-time homebuyers are not able to buy, there should be an assumption that this person would still want to live in a similar type of housing.
Our sweet spot tends to be three-bedroom, two-bath homes with attached garages and fenced-in yards. The general price point for this home in today’s market is roughly $150,000 to $200,000. This property will rent from $1,200 to $1,400 a month.
After you have identified the right property in the right area, then you have to consider how you will attract tenants to your property. Once you have some prospects interested in the property, you want to screen them for their ability to pay rent on time and meet the terms and conditions of a lease. It is important to become familiar with Fair Housing Laws, local housing codes, home-maintenance Issues, and tenant and landlord rights in North Carolina.
If becoming knowledgeable regarding those topics is not part of your management plan, you should consider hiring a local professional rental management company to handle the details of managing your investment property.
Q: Historically, has the area rental market remained strong and steady or has it suffered alongside the rest of the housing market?
The rental market does have some correlation with the housing market because prices for homes do have an impact on rental rates. In periods of oversupply of available homes, home prices go down and people are more inclined to own, not rent. When there is a limited supply of homes, home prices go up and people become more inclined to rent.
The current rental home occupancies, however, are also being driven by first-time homebuyers not being able to qualify for mortgages to purchase homes and the high levels of student debt that limits their ability to afford homeownership.
The southeastern North Carolina rental market remains strong in 2016. We look forward to a healthy rental industry in our region in the future.
Sweyer Property Management has been providing real estate property management services and long-term rentals to the Wilmington area since 1987. The company continues to be the industry leader with more than 1400+ units and more than 20 employees. Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland and Hampstead areas while maintaining a 4.8 Google+ rating for customer service. To inquire about the company’s full-service management services, or to take a tour of houses for rent in the area, email [email protected], or visit WilmingtonForRent.com. You can also Like and follow the Sweyer Property Management Facebook page to get property management tips or see properties for rent.
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