It is well known that some cities and regions are more favorable for renting than buying regardless of what it costs to buy a home. Some people would like to buy (instead of rent) but simply don’t have a choice, at least for a period of months if not years. Under current economic conditions, more and more people are facing increased credit card debt. One of the most important factors a mortgage lender or bank considers is the debt to income ratio of the applicant.
The percentage of consumers facing higher credit card debt compared to “emergency funds” has increased from 22% to 33% over the past three years. A debt to income ratio at or over 30% typically means that consumers will be denied credit, and that is for amounts which are much less than for what obtaining a new mortgage requires.
A multi-family landlord or investor in multi-family properties should be aware of such trends, especially prior to making decisions regarding a potential transaction or if looking to leverage a property to expand a portfolio. These elements can be a part of your research, and could play as much of a role as home sales and price trends within the market(s) under consideration.
Meanwhile, this same research could be just as valuable to landlords that rent and investors looking at single-family homes in specific cities and areas. Just as some cities show more people with much higher than average credit card debt (which favor rental situations), there are others with much lower debt. Having “lower” debt means that more local consumers are likely in a much better position to purchase a home if other market conditions are right and/or the motivation is there.
If you knew that very recent research showed Toledo, Milwaukee, and Des Moines among cities with lower average credit card debt, you would have motivation to sell or invest in homes to benefit from those areas. Or, if you knew that NYC, Riverside (CA), and Chesapeake (VA) were among cities with the most consumer debt, you might have better rental options.
You would not make real estate decisions based on this data alone. However, this is the type of data which could greatly impact and improve your ability to achieve success in real estate. The link below is to some of the results of the research needed to add this criteria to your investing decisions. My team and I are here to help you formulate and utilize this criteria within your research and add to your success.
I want my clients to have this and more information when negotiating with a party that does not. Which side of the negotiating table would you prefer?
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