Many people approaching retirement or already retired are scrambling for income. With interest rates still often hovering around the rate of inflation, many older Americans are trapped between safer investments that yield little income and riskier investments that could generate higher returns but which could also ultimately undermine their savings.
A recent Bloomberg article points out that in response, a growing number of Americans are joining Landlord Nation. A group of mom-and-pop investors have begun to take advantage of low mortgage rates and robust rent growth and have plowed savings into rental properties. Together, these new landlords have helped lift the percentage of single family homes being used as rental properties to new heights. According to a Zillow analysis, the share of single family homes used as rental properties stands at a 30 year high. Data from RealtyTrac indicate that only 65 percent of homes purchased last year are actually occupied by their owners. Not coincidentally, the number of starter homes available for sale has fallen by more than 44 percent since early 2012. It may be that recent increases in home prices is due in large measure to the acquisition of homes by people seeking to turn them into rentals, thereby decreasing the supply of properties available to purchasers who want to live in them. Of course, simply owning a property doesn’t mean that one will make money. There is stiff competition from professionally managed apartment buildings and the supply of renters is hardly infinite.