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Belief in Homeownership Endures

By Michele Lerner

A recent survey by revealed that 72% of American adults still believe that homeownership is part of their personal American dream. Seventy-nine percent of renters in the survey said they plan to buy a home, but 68% of those who plan to become homeowners say that it would likely be more than two years before they are ready to buy.

For real estate investors, the continued interest in homeownership should be a positive sign. Investors can count on a continued strong class of renters, since so many of those surveyed are waiting for a year or two or longer to purchase property. Plus, as demand for housing grows in the coming years, the rental properties that investors own will increase in value.

The expectation is that as the economy stabilizes and consumers gain confidence, home purchases will rise again. Investors who intend to create cash flow by owning and renting a property for several years should be able to realize a profit once the market improves and demand for housing grows - real estate appreciation will only increase.

Renters in the survey say that being able to save enough money for a down payment is a big factor in their ability to buy a home. For investors who want to begin selling some of their properties, a rent-to-own arrangement in which the landlord holds some of the rent towards a down payment could be profitable and entice long-term renters.

Work with a real estate attorney to draw up a rent-to-own agreement and make sure to consult with a lender about the financial arrangement. In most cases, lenders will only accept as down payment funds an amount that has been charged to the renters above fair market rent. A lender can also confirm whether and when the renters will be able to qualify for a mortgage loan.

Another aspect of the survey concerned buyer preferences for various home sizes. Investors who are interested in purchasing property and eventually selling it should carefully consider the survey results which revealed a lack of interest in larger homes. Only 9% of respondents wanted to own a home of more than 3200 square feet.

The most popular range, preferred by 55% of respondents, are homes between 1401 and 2600 finished square feet. The expectation is that demand will be highest in future years for homes of that size.

Property investors should focus on the trends and tastes in their local market, but broader surveys can also reveal the preferences and inclinations of potential renters and buyers.

Michele Lerner, a real estate expert and freelance writer with 20 years of experience, is the author of “HOMEBUYING: Tough Times, First Time, Any Time”.
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