In the long-term house rental market, rents are going up while inventory in some cases is in short supply.
At the same time, investment in the rental home market is on the rise.
“We’re getting more investors this year. I’m seeing that there’s a lot of people that want to get into the Wilmington market just because it has so much growth potential,” said Nancy Baldridge, property management consultant with Sweyer Property Management.
Justin Ash, president of Sea Coast Rentals, agreed that more people are interested in owning rental homes.
“I think the investors are starting to come back now,” he said.
More than two years ago, Ash took the helm of Sea Coast Rentals and became one of the owners of the property management firm, a group that includes Tim Milam, president of Coldwell Banker Sea Coast Advantage, and other local partners.
Ash said the company has grown to include nearly 1,000 listings of short- and long-term rentals.
In general, the rental market for single-family homes and other types of longer-term properties is “really strong right now,” Ash said.
He said inventory is a challenge, because if the rental is “priced right, and in a decent location, it’s going to rent in no time at all.”
Rental prices have been going up in all segments, including single-family homes, Baldridge said.
Sweyer Property management has about 1,600 long-term rental listings in New Hanover, Brunswick, Pender and Onslow counties. And while there are properties among those listings that rent for under $1,000 per month, in some cases as little as $650, the average tends to be around $1,200 for a single-family home, Baldridge said.
Homes in the 28411 and 28409 zip codes tend to command the highest rents, she said.
Whole-home, longer-term renters, especially of larger houses, tend to be in a state of transition, Ash said.
Kelly Willis, a Realtor with Century 21 Sweyer & Associates who focuses on selling homes, said he’s met some potential buyers who prefer to rent for the time being.
“They don’t want to be in a rush to buy, so they’ll rent,” Willis said. “They want to take their time and make sure they understand the area.”
With the home sales market in a healthy condition, prices are going up for buyers, and a typical five- to seven-year housing cycle correction could be in the future, Willis said. Some would-be buyers who might be worried about overpaying for a home might turn to rentals, he said.
Ash said a number of home renters are people waiting for their new house to be built in the area. Some of those renters might choose to rent a home at the beach, traditionally used as a vacation rental, he said, and Sea Coast Rentals has worked with owners to discount the off-season rates typically charged for beach vacation rentals.
Ash said with the housing market doing so well in the Wilmington area right now, it can be hard to find licensed real estate agents who want to focus solely on property management. The number of single-family homes sold in February grew by nearly 4 percent in New Hanover, Brunswick and Pender counties compared to the same month last year, according to numbers from Cape Fear Realtors. The average price grew by a little over 7 percent, according to the tri-county data.
Some in the real estate industry argue that some renters, facing rising rents, would be smart to check their potential options for buying a home versus continuing to rent.
An affordable housing study put together by New Hanover County and the city of Wilmington last year said renters in the county are more likely to be cost burdened by their housing, with 46 percent of them paying more than 30 percent of gross income for their housing. The analysis did not distinguish between housing types.
Some owners of single-family rental homes who want to manage their properties themselves could face some challenges, Ash said. “People think it’s just like collecting rent and finding somebody [to live there]. But do you qualify your tenants? Do you background tenants? By the way, what happens if something goes south? Do you know the eviction process? . . . If you don’t know the process, it’s very intimidating.”
In Ash’s experience, instances of things going terribly wrong with a tenant are definitely not the norm.
But professionals agree that it’s a complicated industry.
“Property management is a very detailed business to be in,” Baldridge said. “You can’t drop the ball. It’s very intense, very time-consuming.”
The demographics of renters run the gamut, Ash said, with many folks nearing or in their retirement years choosing to rent in Leland in Brunswick County and Hampstead in Pender County, while younger people tend to want to find rentals in the city of Wilmington or, if they’re students, near Cape Fear Community College or the University of North Carolina Wilmington. Location often dictates the demographics of renters, Ash said. Sea Coast Rentals recently acquired a rental property management company that was owned by Joan Gerity. Many of her offerings are furnished corporate executive suites for people who are coming into town to work for various companies or in industries that might need workers for a shorter, possibly one- to three-month period.
Furnished rentals, Ash said, work best in what’s considered “a cool location,” such as downtown Wilmington or the area’s beach towns.