TOM CRONE'S Quick Information on Investment / Income Property Action April, 2005

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The Times, They Are a-Changing

“A national technology initiative to standardize online rental search data could eventually give consumers browsing for rental housing, the ability to actually reserve, and rent, specific apartments online,” according to an article by Broderick Perkins published April 6, 2005 in Realty Times.

"The Internet, in terms of a place people are shopping for apartments, is huge and growing. But in terms of a place where people are actually leasing apartments and doing transactions, it is minuscule, " claims Terry Feinberg, president of the Arizona Multi Housing Association in Phoenix.

There, they are using MITS. MITS stands for the Multifamily Information and Transactions Standards, an initiative by the National Multi Housing Council (NMHC) and the National Apartment Association (NAA) to bring under one umbrella, the nation's 50 largest apartment firms and related software providers to create shared data standards for resident screening, property marketing, leasing, property and asset management, and other functions.

Although the system is only in its early stages of development, it eventually could provide renters with a better ability to shop for apartments, and landlords the ability to pre-qualify and rent via the same technology.

In Hottest Markets, Renting Is Real Bargain

Renting becomes more attractive when home prices move up, sometimes out of reach of the lower income or lower credit score buyer.

Although we don’t have statistics for the Twin Cities area, trends elsewhere are worth noting. Boston-based Torto Wheaton Research reports that this buy versus rent gap in some of the country's most desirable markets is now at its widest in over a decade, and by other accounts it’s the biggest since the 1970s.

In Miami, for instance, rental costs versus the cost of home ownership has taken a 26 percent swing in four years, rents now at 63 percent of the cost of homeownership versus 89 percent just four years ago. Some analysts say that the cost advantage of renting having widened in so many markets is startling when considering that apartment rents have also started to rise. Seems to make sense to me, though. If supply and demand are considered, it is likely rental prices will go up as the demand increases, driven by the increase in home prices.

The decision to buy or rent often hinges on such factors as current housing stock available, length of a time a family or individual wants to stay in a given location, and family matters.

For the income property owner, this is good news doubled. Your actual property will increase in value along with the other single family properties, driving up the need for many to rent, and thereby creating a potential for higher rents. That transforms into cash flow and/or debt service reduction for the income property owner.

Source: Wall Street Journal (03/22/05); Simon, Ruth; Smith, Ray A

Check Out These Winners

Click on these MLS links and check out these four winners. Good properties in nice neighborhoods. If you want to go see them, or if you would seriously like an analysis of the financials, let me know. Two on the first, and one on the each of the next two.

4536/4538 S Grand Avenue S, Minneapolis
4001 Grand Avenue S, Minneapolis

3908-10 Sheridan Avenue S, Minneapolis

5400/5402 James Avenue South Avenue S, Minneapolis

Tom Crone