The housing market in Poway is still hot, but even hotter right now is the rental market! Rents are incredibly high right now, with a one-bedroom apartment renting on Zillow for around $1,500, and single family residences being well into the $2,500+ range. Throughout the county, rents are expected to increase faster than the rest of Southern California, according to a recent study from the University of Southern California’s real estate school. Specifically, the study predicts rents will rise by $155 per month by 2018.
So what does this mean? For investors, it means opportunity. It means that if you have been considering purchasing investment property, now is the time. Higher rents mean higher profits. And the beauty of investing in real estate compared to stocks is that you can borrow a large portion of the cost of the purchase price. With stocks, you generally have to pay cash up front for everything you buy. But with real estate, there are loans available that take a portion of the proposed rents to qualify for the loan. If that is not enough incentive, consider the tax incentives. When you borrow money to spend on real estate, you can frequently deduct the interest payments when filing your tax return, increasing your profits even more.
Another study, reported by Zillow in April of this year, shows that the average San Diegan is spending close to 40% of their income on rent, compared with 31% on mortgage. This means that for first-time homebuyers who are currently renting a home, it makes sense to look into the options for purchasing. Interest rates are at historic lows, but every indicator shows that they will be going up with the new year. Further, there are special loan programs still available for first time homebuyers with as much as 100% financing.
A common phrase among homeowners is “I only wish I had purchased sooner!” Don’t let this be you. Contact a Realtor who, with the help of a local lender, can help you find the perfect family or investment property to take advantage of this trend.