MReport March 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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Page 23 of 67

22 | M R EP O RT FEATURE attracted more groups to the area. As the destination becomes more populous, it will become a bigger target for real estate investors. Jersey City, New Jersey, is quickly becoming an attrac- tive location for many on the East Coast. This spot is slowly becoming a "second city" for many people in the area. With the newly redesigned skyline located across the World Trade Center, the Port Authority Trans- Hudson (PATH) rail line, and the New Jersey Light rail system, this destination plays a big role in the transportation industry. Over time, Jersey City has developed opportunities for nightlife on the riverfront and re-creation of the side to showcase the range of activities for its visitors Amenities in the area play a crucial role in attracting renters and the investment opportunities in these areas allow investors to capitalize on the arrival of new residents. Finding areas where renting remains a more affordable option than buying should remain a focus for investors hoping to strengthen their portfolios. Build-to-Rent O nce a small segment of the market, the build-to-rent niche is growing rapidly. A lack of hous- ing inventory or the higher cost of homes in many markets is pushing investors to focus on new con- struction opportunities. However, unlike in the past, investors are building single-family homes solely for the purpose of renting them out rather than selling. Holding these properties as rental ensures a long-term revenue stream versus a slim profit margin the investor would see from the sale of the new construction home. Developers are turning their attention towards building large, professionally managed commu- nities of detached single-family homes specifically as rentals. These communities offer the best of both worlds to tenants, offering shared amenities that renters often seek in an apartment building while providing the comfort and privacy of being in a single-family home. The expansion of the build- to-rent trend is just beginning and should be an area of the market that all real estate investors take into consideration. Short-Term Vacation Rentals S hort-term rentals, like those listed on Airbnb and Homestay, provide investors with the opportunity to diversify their portfolio and increase the amount of cash flow they collect every month. Unlike a fixed monthly paycheck from a long-term renter, short-term rental properties have the potential to double or triple that amount in a shorter period of time. In 2020, vacation rental prop- erties will continue to become another outlet for individuals, families, and groups to turn to when planning vacations. Since the beginning of Airbnb, the need for short-term vacation rentals has skyrocketed and will continue to do so because they offer travelers the ability of a unique stay and adds even more variety to their trip. Due to continued investment in vacation rentals and the "special touch" provided to guests, they have begun to overpower hotels. At the end of the day, it is cru- cial to recall that with increased cash flow also comes expenses. Real estate investors should care- fully consider whether or not they can handle the cost, time, and effort that to have a profitable and successful short-term rental listing. Overall, short-term rental opportu- nities should continue to be a great area for investors. It is important to note that investors that decide to dive into the world of short- term rentals need to be cognizant of existing or upcoming laws and regulations that could affect the future of these property types. What Does the Future Hold? D emand for rentals across the U.S. doesn't show any signs of slowing down. According to an article from, 35% of renters across the U.S. are in SFRS and an estimated 13 million new rental households that are expected to form by 2030. With no shortage of opportunity, an in- vestor should take the time to de- termine which market and strat- egy best fits their business needs. It is also a good idea to find a reliable financing partner who has experience with rental properties and leverage their knowledge to increase a rental portfolio. A great financing partner can help an in- vestor move quickly and provide a consistent flow of capital for future real estate investment deals. There will be significant opportu- nities for investors with single- family rentals for the foreseeable future, however, it is up to the investor to identify the emerg- ing trends and up and coming markets to make the most of this ever-growing space. . JEFFREY TESCH is responsible for overseeing the day-to-day operations of RCN Capital LLC, including sales growth initiatives, underwriting review with compliance oversight, and leadership of senior-level strategic planning. Joining the Company in 2010 as Managing Director, Tesch led efforts to develop a national brand in private lending with the best practices and transparent products for a diverse customer base. Since RCN's inception, Tesch has personally underwritten over 5,500 loans and overseen over $1 billion in originations. Unlike a fixed monthly paycheck from a long-term renter, short-term rental properties have the potential to double or triple that amount in a shorter period of time.

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