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Renting is, and will always be, a rollercoaster. Right now in the market, rental costs are going up and up, and are showing no sign of leveling out. In this episode, I provide three primary reasons why rental costs are increasing and why they are actually a sign of a healthy marketplace.

Appreciation Rates are Increasing

The first reason for this being is that appreciation rates are increasing across the country. More specifically in the western half of the Phoenix metropolitan area, appreciation rates on property values are so high right now that a lot of home buyers can stand to sell within two years and actually make a profit off of owning their home. Imagine this from a landlords perspective. They raise rent because they can see how much their property is worth, how much it is increasing in value, and they have to make it worth keeping a tenant. They have to make it worth making the monthly income, otherwise, they should just sell and cash out of the property altogether. So they raise rates to make it worth it to keep their tenant to make their bottom line favorable.

Cheaper to Buy

The second reason is because it is cheaper to buy. Landlords know this, but they also know that buyers are grossly misinformed on the home buying process. They also know that many people, in primarily military communities, aren’t going to buy since they don’t know when they will be leaving the area. Landlords are counting on you not being educated on the process. If you are in the military you have access to the VA loan, which does not require a down payment, and if you pick the right realtor and the right program, it costs very, very little- much less than it costs to get into a rental. Not to mention, your monthly mortgage and interest are going to be less than what you will be paying in rent.

Inventory is Dwindling

The third primary reason why rent is increasing is because inventory is dwindling. More and more landlords are cashing out on their investments because it’s not worth the costs of maintaining a tenant anymore. Landlords want to cash in on these high appreciation rates and sell the homes. This actually creates a two-sided opportunity. The first side being that you could buy a home in the area for less than the cost of rent and eventually turn it into a rental property. This is a great lower risk opportunity to become an investor because there is so little inventory on the market. On this other side of this is landlords can charge essentially whatever they want because they know they are going to get multiple applications on every property and it’s going to be really stressful for any renter to find the right fit for them.

Thank you for tuning in to the #AskJulieC Real Estate Show. Are you tired with your rent increasing and would like to know more about the home buying process? Feel free to message me on Facebook, and find out how easy it is to take advantage of this opportunity!