Recently, news of a Condo developer planning to invest $1B in buying single-family homes across the country made headlines and sent ripples across the real estate industry. This is a calculated move designed to profit from the current housing crisis gripping Canada.
A combination of factors including increased immigration, fewer supply of houses in relation to demand, low interest rates, etc have caused house prices to skyrocket to an all-time high. This means more potential house-owners are finding themselves unable to afford a suitable home. With huge funding-backed corporates now looking to buy single-family houses, it’s possible that there’s even more pressure on the housing market. This has already been noticed in the US. A recent Business Insider article described an incident where a billion-dollar private equity firm comfortably beat an everyday American family seeking to buy a home.
According to Insider, “In December, for instance, Cerberus paid $287,000 for 217 Heffron Circle, a four-bedroom Maineville home with a roomy backyard and a three-car garage. The investment firm beat out a family that had placed a higher bid of $295,000, which was closer to the home’s asking price of $300,000, according to Michelle Sloan, a RE/MAX broker who manages its Maineville office and who represented the seller in the deal. The family had made its offer contingent on securing a mortgage for the property, whereas Cerberus was willing to pay cash.
“My client opted for the less risky offer for cash,” Sloan said.”
With such a gloomy outlook for the housing situation, there is a natural upswing in the demand for rentals - and especially single-family ones. In this article, we’ve separately covered the attractions of a single-family rental for both tenants and investors/landlords.
- People who could have purchased a house 5 years ago, are now finding themselves priced out of the game. These reluctant tenants are obviously inclined towards renting a single-family home - to enjoy the lifestyle perks that come with living in a detached house without the financial burden of owning one.
- Living through a pandemic marked by lockdown after lockdown has made more people want to live in bigger spaces, with more room for inside movement. Mental health is being increasingly associated with the quality and quantity of surrounding space.
- Companies are starting to realise the benefits of having remote positions. This means people are no longer obligated to live in expensive, cramped apartments at the heart of the city. More tenants are choosing to work from spacious detached homes on the outskirts.
- Even if single-family rentals are pricier than apartments or condos, tenants are willing to pay extra in exchange for privacy. This holds true especially for families with children or pets.
- Unlike the case of multi-unit properties, the property owner or landlord directly manages a single-family home. This helps tenants build personal relationships with the landlord, rather than communicating with an indifferent property management company. Modern tools like Tenantcube help tenants find and send applications to landlords directly, and make the renting experience very enjoyable.
- The current housing situation has made it difficult to own homes, especially within city limits. However, people are choosing to invest in comparatively cheaper houses in rural areas, and renting them out. With the advent of cloud-based technology, more remote jobs are being created and people are getting the opportunity to work from anywhere. So no matter how far from the city, single-family homes are in demand.
- Getting great tenants for single-family rentals is now easier, with modern technology that allows landlords to do so from the comfort of their homes. The financial risk that comes with depending on the rental payments from one tenant is largely eliminated. Tenantcube offers a fool-proof screening process that empowers landlords to select ideal tenants. Sign up for free today, and check it out!
- Single-family homes are easier to maintain and keep track of, than multi-unit properties. Rental payments, and tenant requests can be made online. At Tenantcube, our goal is to take care of all the admin work involved in finding and onboarding new tenants so you are free to focus on what truly matters.
- Investing in single-family homes is considered to be safer, as you can easily find investors to buy from you at a higher value - so you have an exit strategy in place.
With the demand for single-family rentals higher now than ever before, this begs the question - are we looking at a future where paying rent for a lifetime becomes normal, and house ownership is next to impossible? This remains to be seen.