Will there be a Market for Single-Family Rentals in 2020? Investar USA Foun

There has been strong and steady growth for single-family rentals in certain markets throughout the U.S. Investar USA cofounder Ron Cadman discusses the prospects of single-family rental investment in the coming year. Ron Cadman has been a real estate developer for three decades, specializing in residential single-family and multifamily rentals.

While some economists may argue that single-family rentals have shown less-than-impressive yields over the past few years, I feel that single-family rental assets consistently outperform the majority of other investments. The average yields in high-growth areas are between 4 and 5 percent, with national occupancy rates nearing 95 percent for 2019’s last quarter.

Although the economy appears to be strong, there has been a great deal of concern over the previous quarters that the escalating trade wars and tariffs – and the general unease about the upcoming election – could have a negative impact in 2020. Investing in single-family rentals could provide a safe-haven solution that yields dividends even if we experience economic uncertainty in the coming year. Here are a few reasons why single-family rental investment could net solid returns in the coming year.

The rental market is strong.

The demand for affordable rental housing far exceeds supply. Moreover, real estate investment professionals anticipate increases in rent will surpass yields from commercial real estate and may reach 7 percent. Unlike traditional investments, real estate investments aren’t instantly impacted by swings in the stock market, so cautious investors won’t have to worry significantly about volatility.

Unemployment rates are low.

Strong employment and low interest rates are historical predictors of housing market health. But even an interest rate hike could give the rental market an additional boost, disincentivizing renters from buying.

Millennials are going to enter the housing market in huge numbers.

Single-family home rental is an extremely attractive proposition to the millennial population, who seek housing flexibility and may wish to wait for property values to decline.

Baby boomers may not have sufficient funds to purchase new homes.

As the older population seeks to simplify and streamline their expenses and living arrangements, they may not have the capital to purchase new homes, and instead seek rental options. Single-family rentals will likely be more attractive to previous homeowners than multifamily units, as they offer a quieter, more suburban environment.

If you plan on investing in single-family rentals, always perform your due diligence and select the regions you choose to target wisely. Single-family rentals are excellent starter investment for those new to real estate, and have the potential to yield healthy returns for years to come.

Ron Cadman is the co-founder of Investar USA, a leading North American real estate development firm.